Charise Fong and Emily Busch, EBALDC: Local CDCs are vital to safeguarding and creating the spaces integral to healthy, vibrant, and equitable neighborhoods and cultural business districts, such as the Fruitvale Transit Village, Swan’s Market, and San Francisco and Oakland Chinatowns. CDCs support these neighborhoods by providing affordable commercial and cultural spaces, which are essential to supporting low-income families and entrepreneurs. This especially holds true for neighborhoods with rising rents and property values. 

As community anchors, CDCs have been vital to the survival of Black, Indigenous, and People of Color (BIPOC) businesses, especially during COVID. We rolled up our sleeves to provide emergency response programs throughout the pandemic that included:

The COVID-19 pandemic disproportionately affected the health and financial well-being of communities of color. Over the past year, minority banks that specialize in providing financial services to underserved communities and minority borrowers have also performed significantly worse than other banks of similar size. Minority banks projected higher loan losses and had lower profits than nonminority banks. To the extent that underperforming minority banks may be more reluctant to expand lending—whether to avoid risk or minimize regulatory scrutiny—it could further exacerbate the unevenness of the recovery.

The link between changes in U.S. inflation and the output gap has weakened in recent decades. Over the same time, a positive link between the level of inflation and the output gap has emerged, reminiscent of the original 1958 version of the Phillips curve. This development is important because it indicates that structural changes in the economy have not eliminated the inflationary pressure of gap variables. Improved anchoring of people’s expectations for inflation, which makes the expected inflation term in the Phillips curve more stable, can account for both observations.

On Thursday July 15, 2021, at 2:00 p.m. ET, staff from the Federal Reserve hosted an Ask the Fed webinar on the SCALE method for determining expected credit losses under CECL.  The Financial Accounting Standards Board (FASB) and the Conference of State Bank Supervisors (CSBS) also participated in the webinar. 

The SCALE method leverages industry or peer data from the Call Report as the starting point for estimating an allowance for credit losses.  Banks must further adjust this starting point to reflect bank-specific facts and circumstances to arrive at a final CECL estimate. SCALE is a spreadsheet-based tool intended to assist banks with total assets under $1 billion in implementing CECL. 

The link to the Ask the Fed session, the SCALE spreadsheet-based tool, tool instructions, and FAQs are available on the SCALE page.

The link between changes in U.S. inflation and the output gap has weakened in recent decades. Over the same time, a positive link between the level of inflation and the output gap has emerged, reminiscent of the original 1958 version of the Phillips curve. This development is important because it indicates that structural changes in the economy have not eliminated the inflationary pressure of gap variables. Improved anchoring of people’s expectations for inflation, which makes the expected inflation term in the Phillips curve more stable, can account for both observations.

Author(s): Jens H. E. Christensen, Jose A. Lopez, and Paul L. Mussche

Portfolio diversification is as important to debt management as it is to asset management. In this paper, we focus on diversification of sovereign debt issuance by examining the extension of the maximum maturity of issued debt. In particular, we examine the potential costs to the U.S. Treasury of introducing 50-year bonds as a financing option. Based on evidence from foreign government bond markets with such long-term debt, our results suggest that a 50-year Treasury bond would likely trade at an average yield that is at most 20 basis points above that of a 30-year bond. Our results based on extrapolations from a dynamic yield curve model using just U.S. Treasury yields are similar.

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COVID-19 Forecasts by County provides U.S. county-level forecasts of COVID-19 infection growth rates based on the econometric model developed in Wilson (2020). The forecast methodology uses county panel data from early 2020 through the latest available data to estimate out-of-sample predicted values from a panel fixed-effects regression specification. To measure the reliability of these forecasts, this page also shows a comparison of past predictions to estimates of actual growth over several forecast horizons. See Wilson (2021) for a discussion of the forecast accuracy.

The regression equation is derived from the canonical epidemiological model of infectious disease spread, known as the Susceptible-Infectious-Removed (SIR) model. It relates a county’s subsequent growth, measured as the change in the log number of infected residents, over a specific horizon to current and past values of observable drivers of disease transmission. These drivers include social...

The COVID-19 pandemic disproportionately affected the health and financial well-being of communities of color. Over the past year, minority banks that specialize in providing financial services to underserved communities and minority borrowers have also performed significantly worse than other banks of similar size. Minority banks projected higher loan losses and had lower profits than nonminority banks. To the extent that underperforming minority banks may be more reluctant to expand lending—whether to avoid risk or minimize regulatory scrutiny—it could further exacerbate the unevenness of the recovery.

Inflation Sensitivity to COVID-19 updates data on the contributions to core personal consumption expenditures (PCE) inflation by the degree of sensitivity to the economic disruptions caused by the pandemic. The decomposition is based on the methods described in Shapiro (2020a, b).

The PCE measure of U.S. inflation is considered particularly useful for identifying underlying inflation trends. It tracks the change in prices of a particular basket of goods and services purchased by consumers throughout the economy. The “core” measure excludes food and energy products, whose prices tend to be volatile.

The data on this page divide the categories of core PCE inflation into sensitive and insensitive components, as shown in Chart 1. COVID-sensitive components include those categories where either prices or quantities moved in a statistically significant manner at the onset of the pandemic, between February and April 2020. COVID-insensitive components include...

July 30, 2021

Residential real estate is one of the hottest topics in the 12th District since the onset of the COVID-19 pandemic, and Q1 was no exception. Housing inventory has become exceptionally tight, and construction costs increased, causing a slowdown in sales. Home price growth continued as mortgage interest rates remained relatively low. As a result, single-family price-to-rent ratios in the Mountain and Pacific Census divisions increased the most across the nation, raising the prospect of a price correction. Here’s a deeper dive into the factors driving residential real estate conditions in the District.

On Thursday July 15, 2021, at 2:00 p.m. ET, staff from the Federal Reserve hosted an Ask the Fed webinar on the SCALE method for determining expected credit losses under CECL.  The Financial Accounting Standards Board (FASB) and the Conference of State Bank Supervisors (CSBS) also participated in the webinar. 

The SCALE method leverages industry or peer data from the Call Report as the starting point for estimating an allowance for credit losses.  Banks must further adjust this starting point to reflect bank-specific facts and circumstances to arrive at a final CECL estimate. SCALE is a spreadsheet-based tool intended to assist banks with total assets under $1 billion in implementing CECL. 

The link to the Ask the Fed session, the SCALE spreadsheet-based tool, tool instructions, and FAQs are available on the SCALE page.