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The Economy

Chris Foote

Federal Reserve Bank of BostonResearch Department

October 6, 2011

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Outline

1 The Economy in the U.S. and New England

2 Newspapers and the Business Cycle

3 Recent Economic Policy Initiatives

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Disclaimer: I do not speak for:

Eric Rosengren, President of Boston Fed Ben Bernanke, Chairman of Federal Reserve

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The Economy in the U.S. and New England

Employment Levels: Total Nonfarm Payrolls

100

105

110

115

120

TotalNonfarmEmployment

(Jan1995=100)

1995m1 2000m1 2005m1 2010m1

United StatesMassachusetts

New England

Foote (Boston Fed) The Economy October 6, 2011 5 / 39

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The Economy in the U.S. and New England

Unemployment Rate

0

2

4

6

8

10

12

PercentofL

aborForce

1980m1 1990m1 2000m1 2010m1

Recessions Massachusetts

U.S. New England

Foote (Boston Fed) The Economy October 6, 2011 6 / 39

Th E i h U S d N E l d

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The Economy in the U.S. and New England

Recent Private-Sector Employment Growth

1000

750

500

250

0

250

500

Thousan

dsofPayrollJobs

1000

75

0

500

250

0

250

500

ThousandsofPa

yroll

Jobs

2008m1 2009m1 2010m1 2011m1

Sources: Bureau of Labor Statistics (Establishment Survey).

Foote (Boston Fed) The Economy October 6, 2011 7 / 39

Th E i th U S d N E l d

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The Economy in the U.S. and New England

Unemployment in New England

4

6

8

10

12

PercentofLabor

Force

2002m1 2004m1 2006m1 2008m1 2010m1 2012m1

CT MEMA NH

RI VT

Foote (Boston Fed) The Economy October 6, 2011 8 / 39

The Economy in the U S and New England

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The Economy in the U.S. and New England

Unemployment and Inflation

3

2

1

0

1

2

3

4

5

6

7

8

9

10

Percent

3

2

1

0

1

2

3

4

5

6

7

8

9

10

Percent

1998m1 2000m1 2002m1 2004m1 2006m1 2008m1 2010m1 2012m1

Unemployment Rate12Mo. Change in Core CPI

12Mo. Change in Headline CPI

Foote (Boston Fed) The Economy October 6, 2011 9 / 39

The Economy in the U S and New England

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The Economy in the U.S. and New England

Why is the recovery so slow? Some possibilities

De-leveraging: Lack of aggregate demand as firms and

consumers rebuild balance sheets?Labor markets: Unemployed dont have the right skills or are

locked into underwater mortgages?

Credit markets: Banks unable/unwilling to lend?

Uncertainty: Firms wary of future health-care or tax liabilities?

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The Economy in the U S and New England

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The Economy in the U.S. and New England

Increase in Saving

7000

8000

900

0

10000

11

000

BillionsofChain

ed$2005

Jan 1998 Jan 2000 Jan 2002 Jan 2004 Jan 2006 Jan 2008 Jan 2010 Jan 2012

Disposable IncomeConsumption

Foote (Boston Fed) The Economy October 6, 2011 11 / 39

The Economy in the U S and New England

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The Economy in the U.S. and New England

Long-Term Unemployment

0

10

20

30

40

50

PercentofUnemp

loyedPersons

1960m1 1970m1 1980m1 1990m1 2000m1 2010m1

Recessions Share of Unemployed: 27 Weeks or Longer

Foote (Boston Fed) The Economy October 6, 2011 12 / 39

The Economy in the U.S. and New England

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The Economy in the U.S. and New England

Unemployment Rates by Education

0

5

10

1

5

Percent

1992m1 1996m1 2000m1 2004m1 2008m1 2012m1

HS Dropout

High School

Some College

Bachelors or Higher

Foote (Boston Fed) The Economy October 6, 2011 13 / 39

The Economy in the U.S. and New England

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y g

Unemployment Rates by Education (Normalized)

50

100

150

200

Index(Jan1992

=100)

1992m1 1996m1 2000m1 2004m1 2008m1 2012m1

HS Dropout

High School

Some College

Bachelors or Higher

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The Economy in the U.S. and New England

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y g

Job-Finding Rates by Industry

.1

.2

.3

.4

.5

ProbabilityofFin

dingaJob

1995m1 2000m1 2005m1 2010m1

Construction

Other

Note: Fivemonth moving averages.

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The Economy in the U.S. and New England

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Job-Finding Rates by Skill Level

.15

.2

.25

.3

ProbabilityofFin

dingaJob

2007m1 2008m1 2009m1 2010m1 2011m1

High

Middle

Low

Note: Dashed line corresponds to September 2008, fivemonth moving averages.

Foote (Boston Fed) The Economy October 6, 2011 16 / 39

Newspapers and the Business Cycle

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Advertising Revenues by Source

0

1250

250

0

MillionsofDollars

1970q1 1980q1 1990q1 2000q1 2010q1

National Print

0

3250

650

0

MillionsofDollars

1970q1 1980q1 1990q1 2000q1 2010q1

Retail Print

0

3250

6500

Millionsof

Dollars

1970q1 1980q1 1990q1 2000q1 2010q1

Classified Print

0

1250

2500

Millionsof

Dollars

1970q1 1980q1 1990q1 2000q1 2010q1

Online

Source: Newspaper Association of America

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Newspapers and the Business Cycle

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Ad Revenues: Total Print and Online

0

750

0

1

5000

MillionsofDollars

1970q1 1980q1 1990q1 2000q1 2010q1

Recessions Total Print Online

Source: Newspaper Association of America

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Newspapers and the Business Cycle

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Classified Ad Revenues by Source

0

1000

200

0

MillionsofDollars

1995q1 2000q1 2005q1 2010q1

Auto

0

1250

250

0

MillionsofDollars

1995q1 2000q1 2005q1 2010q1

Real Estate

0

1250

2500

Millionsof

Dollars

1995q1 2000q1 2005q1 2010q1

Recruitment

0

500

1000

Millionsof

Dollars

1995q1 2000q1 2005q1 2010q1

Other

Source: Newspaper Association of America

Foote (Boston Fed) The Economy October 6, 2011 20 / 39

Newspapers and the Business Cycle

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Measures of Job Vacancies

0

3000

6000

ThousandsofOpenings

0

50

100

Index(1987=100)

1960m1 1970m1 1980m1 1990m1 2000m1 2010m1

Recessions

Index of HelpWanted Ads (left scale)

Job Openings from JOLTS (right scale)

Sources: Conference Board and Bureau of Labor Statistics

Foote (Boston Fed) The Economy October 6, 2011 21 / 39

Newspapers and the Business Cycle

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Circulation Levels

0

20

40

6

0

Millions

1950 1960 1970 1980 1990 2000 2010

Sunday

Morning

Evening

Source: Editor and Publisher Yearbook

Foote (Boston Fed) The Economy October 6, 2011 22 / 39

Newspapers and the Business Cycle

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Newspaper Readership by AgeSource: November 2008 supplement to the Current Population Survey

0

20

40

60

Everyday A few timesa week

A few timesa month

Once a month Not at all

20s 30s 40+ 20s 30s 40+ 20s 30s 40+ 20s 30s 40+ 20s 30s 40+

United States

0

20

40

60

Everyday A few times

a week

A few times

a month

Once a month Not at all

20s 30s 40+ 20s 30s 40+ 20s 30s 40+ 20s 30s 40+ 20s 30s 40+

New England

Foote (Boston Fed) The Economy October 6, 2011 23 / 39

Newspapers and the Business Cycle

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Educational Attainment in U.S. & New England

0

10

20

30

40

ShareofPop25+

US CT ME MA NH RI VT

Bachelors or greater

0

5

1

0

15

20

Shareo

fPop25+

US CT ME MA NH RI VT

Advanced degree

1990 2008

Foote (Boston Fed) The Economy October 6, 2011 24 / 39

Newspapers and the Business Cycle

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Newspaper Readership by EducationSource: November 2008 supplement to the Current Population Survey

0

20

40

60

Everyday A few timesa week

A few timesa month

Once a month Not at all

< Col Col < Col Col < Col Col < Col Col < Col Col

United States

0

20

40

60

Everyday A few times

a week

A few times

a month

Once a month Not at all

< Col Col < Col Col < Col Col < Col Col < Col Col

New England

Foote (Boston Fed) The Economy October 6, 2011 25 / 39

Newspapers and the Business Cycle

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News Magazine Readership by AgeSource: November 2008 supplement to the Current Population Survey

0

20

40

60

Everyday A few timesa week

A few timesa month

Once a month Not at all

20s 30s 40+ 20s 30s 40+ 20s 30s 40+ 20s 30s 40+ 20s 30s 40+

United States

0

20

40

60

Everyday A few times

a week

A few times

a month

Once a month Not at all

20s 30s 40+ 20s 30s 40+ 20s 30s 40+ 20s 30s 40+ 20s 30s 40+

New England

Foote (Boston Fed) The Economy October 6, 2011 26 / 39

Newspapers and the Business Cycle

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News Magazine Readership by EducationSource: November 2008 supplement to the Current Population Survey

0

20

40

60

80

Everyday A few timesa week

A few timesa month

Once a month Not at all

< Col Col < Col Col < Col Col < Col Col < Col Col

United States

0

20

40

60

80

Everyday A few times

a week

A few times

a month

Once a month Not at all

< Col Col < Col Col < Col Col < Col Col < Col Col

New England

Foote (Boston Fed) The Economy October 6, 2011 27 / 39

Recent Economic Policy Initiatives

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Unemployment and Inflation (Again)

3

2

1

0

1

2

3

4

5

6

7

8

9

10

Percent

3

2

1

0

1

2

3

4

5

6

7

8

9

10

Percent

1998m1 2000m1 2002m1 2004m1 2006m1 2008m1 2010m1 2012m1

Unemployment Rate

12Mo. Change in Core CPI

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Recent Economic Policy Initiatives

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Source: Federal Reserve Bank of San Francisco

Foote (Boston Fed) The Economy October 6, 2011 30 / 39

Recent Economic Policy Initiatives

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Federal Funds Rate

0

5

10

15

Perce

nt

Jan 1985 Jan 1990 Jan 1995 Jan 2000 Jan 2005 Jan 2010

Recessions Fed Funds Rate

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Recent Economic Policy Initiatives

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Federal Funds Rate and 10-Year Treasury Yield

0

5

10

15

Perce

nt

Jan 1985 Jan 1990 Jan 1995 Jan 2000 Jan 2005 Jan 2010

Recessions Fed Funds Rate 10Year Treasury Yield

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Recent Economic Policy Initiatives

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Recent Economic Policy Initiatives

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Recent Economic Policy Initiatives

H dli d C I fl ti

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Headline and Core Inflation

2

0

2

4

6

8

10

12

14

16

12m

o.P

er

cen

tCh

an

ge

2

0

2

4

6

8

10

12

14

16

12

mo.

Percen

tChange

Jan 1950 Jan 1960 Jan 1970 Jan 1980 Jan 1990 Jan 2000 Jan 2010

Recessions Headline CPI Core CPI

Source: Bureau of Labor Statistics.

Foote (Boston Fed) The Economy October 6, 2011 35 / 39

Recent Economic Policy Initiatives

S l t Slid

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Supplementary Slides

Foote (Boston Fed) The Economy October 6, 2011 36 / 39

Recent Economic Policy Initiatives

H P i

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House Prices

100

225

350

4

75

600

725

R

escaledPriceIndex

(1980:I=100)

1980q1 1990q1 2000q1 2010q1

United States CPI

Massachusetts New England

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Recent Economic Policy Initiatives

Employment Levels: Total Nonfarm Payrolls (Again)

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Employment Levels: Total Nonfarm Payrolls (Again)

100

105

110

115

120

TotalNonfarmEmploymen

t(Jan1995=100)

1995m1 2000m1 2005m1 2010m1

United States

Massachusetts

New England

Foote (Boston Fed) The Economy October 6, 2011 38 / 39

Recent Economic Policy Initiatives

Problems in Europe

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Problems in Europe

0

5

10

1

5

20

25

Percent

01jan2004 01jan2006 01jan2008 01jan2010 01jan2012

Germany

Greece

United Kingdom

Foote (Boston Fed) The Economy October 6, 2011 39 / 39