We identify shocks to household consumption using cross-sectoral information. We find that those shocks have accounted for close to 40 percent of pre-pandemic business cycle fluctuations in the U.S. Such shocks have the characteristics of demand shocks: They increase (or decrease) output, inflation and interest rates. The results imply that one might be able to significantly stabilize business cycles by stabilizing consumption fluctuations.

Research staff regularly monitors the national economy, helping the Richmond Fed grasp current conditions and their implications for monetary policy. Updated weekly, the following data is part of the information presented during policy discussions and meetings with our board of directors.

Snapshot is a monthly update of the Fifth District economy, published by the Regional Economics section of the Federal Reserve Bank of Richmond. Snapshot includes timely analysis of labor market, household, and housing market conditions at both the state and metro area level. Comments and suggestions on content and format are welcomed.

National markets in many U.S. industries seem to be increasingly dominated by large companies. Some policymakers have argued that this growing market concentration is a sign of weakening competition, but concentration by itself does not necessarily translate into market power. It may be too soon to reach a decisive conclusion about whether market power, not simply market concentration, is on the rise.

Recently, the news has been filled with stories of employers unable to find workers. While there's disagreement over whether this is because of ongoing health concerns related to the pandemic, lack of child care while schools are out, fiscal support allowing unemployed workers to delay their job search or some other reason, many businesses have pointed to a shortage of labor as one of their top concerns over the past few months.

This is evident in business surveys. In the National Federation of Independent Business's monthly Small Business Survey, 56 percent of small businesses reported few or no qualified applicants for job openings in June, just one percentage point off the all-time high reached the prior month. And in July, the Richmond Fed's Survey of Manufacturing Activity reported that the share of firms facing a decline in qualified labor was 34 percentage points higher than the share of firms having an easier time finding workers.

But is every industry...

Research staff regularly monitors the national economy, helping the Richmond Fed grasp current conditions and their implications for monetary policy. Updated weekly, the following data is part of the information presented during policy discussions and meetings with our board of directors.

Recent research has emphasized the importance of a few large firms in driving overall economic fluctuations, a view known as the "granular hypothesis." I find that the granular hypothesis can explain about 15 percent of aggregate U.S. fluctuations, a smaller share than found in other research. Thus, the granular hypothesis plays a meaningful role for the U.S. economy, but there is still plenty of room for aggregate factors to be relevant.

President Joe Biden and members of Congress have been negotiating an infrastructure spending plan for several months. One component of each iteration thus far has been to provide the reauthorization of funding for highway, road, and bridge repair and construction. While the exact spending amount is still to be determined, it seems highly likely that investing in roads and bridges is forthcoming. So, what is the current state of highways, roads, and bridges in the Fifth District, where are projects underway, and where might some additional spending be needed?

Road and Bridge Quality

The Bureau of Transportation Statistics within the U.S. Department of Transportation (DOT) reports on the quality of roads and bridges across the United States. The percentage of roads rated as acceptable and the percentage of bridges rated as poor provide two useful metrics for evaluating the quality of surface transportation across the Fifth District.

The Federal Highway...

The cost of college has been rising. After adjusting for inflation, the average tuition for a private four-year school in 2019-2020 is about twice what it was three decades ago. For public four-year schools, tuition nearly tripled over the same period.

The share of the U.S. population with a college degree is growing. So is the share of degree holders who took out federal student loans. Newer repayment options allow borrowers to adjust their payments based on their income. More education on available options may help borrowers navigate the system and choose the repayment plan that works best for them.

This episode shares part of a presentation by Laura Ullrich, the Richmond Fed's regional economist based in Charlotte. Ullrich spoke about wage, income and wealth inequality, an issue that was brought into high relief during the COVID-19 pandemic. Her talk was recorded at the Travelers Aid International Conference in June 2019.

Research staff regularly monitors the national economy, helping the Richmond Fed grasp current conditions and their implications for monetary policy. Updated weekly, the following data is part of the information presented during policy discussions and meetings with our board of directors.

Can health insurance cause people to live longer? Randomized studies of this question have been rare. In a recent article in the Quarterly Journal of Economics, Jacob Goldin of Stanford Law School and Ithai Lurie and Janet McCubbin of the U.S. Department of the Treasury's Office of Tax Analysis used evidence from a randomized outreach study conducted by the Internal Revenue Service (IRS) to estimate a causal relationship between health insurance coverage and mortality outcomes.

Under the "individual mandate" of the Patient Protection and Affordable Care Act, commonly known as the Affordable Care Act or ACA, individuals without health insurance are required to pay a tax. At the time of the study, the tax was at least 2.5 percent of household income above the filing threshold (the rate is now zero). In 2017, the IRS identified 4.5 million households that had previously paid that tax. Of those 4.5 million households, the IRS randomly selected 3.9 million to receive a letter...

Are you a recent graduate considering applying to a Ph.D. program? If so, working as a Research Associate (RA) is an ideal way to learn more about academic economic research.

Through our Research Associates Program, you’ll have access to our economists working in various areas and learn from them through exclusive seminars and hands-on projects. You’ll also help economists with their independent academic research and policy memos to brief our Bank’s president on the state of the economy, policy questions, and current economic research. 

Each day in this program will give you a chance to learn and grow your experience related to dynamic economic models, coding, data analytics and visualizations and paper reviewing. Our program also offers a flexible work schedule and tuition reimbursement for you to take courses related to your work. 

Learn more about being a Research Associate at the Richmond Fed and meet our current RA team. When...

Never has the case for broadband expansion been clearer: The COVID-19 pandemic exposed the digital divide and the need for rapid broadband infrastructure expansion. How can states and localities make best use of the resources available for broadband infrastructure and create a conducive environment for broadband expansion?

Please join the Federal Reserve Bank of Richmond and The Pew Charitable Trusts for a broadband expansion summit on June 8, 2021, from 9 a.m. – 12 p.m. Our objective is to highlight best practices states can use for broadband policy and innovative approaches to creating public-private partnerships for broadband infrastructure projects. Our program also features interactive breakout sessions for each state in the Fifth Federal Reserve District – Maryland, North and South Carolina, Virginia and West Virginia – to discuss solutions for overcoming barriers to broadband expansion in each state.

While the savings of retired singles tend to fall with age, those of retired couples tend to rise. We estimate a rich model of retired singles and couples with bequest motives and uncertain longevity and medical expenses. Our estimates imply that while medical expenses are an important driver of the savings of middle-income singles, bequest motives matter for couples and high-income singles and generate transfers to nonspousal heirs whenever a household member dies. The interaction of medical expenses and bequest motives is a crucial determinant of savings for all retirees. Hence, to understand savings, it is important to model household structure, medical expenses, and bequest motives.

In the early 1960s, South Korea's economy was far from the dynamic performer that would later become known as an "Asian Tiger." On the contrary, its disappointing growth drew unfavorable comparisons to North Korea at the time.

In their seminal 1973 treatises on financial markets and economic development, Stanford University economists Ronald McKinnon and Edward Shaw labeled South Korea's ailment "financial repression." According to their diagnoses, the country's economic development had been impaired by well-intentioned but counterproductive policies — chiefly interest rate ceilings and administratively directed investment programs — that combined to tax savings and misallocate investment. The country's prospects improved greatly after it introduced fiscal and banking reforms in 1964-1965 that substantially removed these polices and allowed interest rates to increase toward market-clearing levels.

Many policies have been associated with financial repression over...

Research staff regularly monitors the national economy, helping the Richmond Fed grasp current conditions and their implications for monetary policy. Updated weekly, the following data is part of the information presented during policy discussions and meetings with our board of directors.

April 29, 2021

Business conditions in the Carolinas strengthened in April, according to the most recent survey from the Federal Reserve Bank of Richmond. The indexes for general business conditions and sales rose from 30 and 21 in March to 36 and 28, respectively, in April. Firms also reported increased capital spending, and they expected conditions to continue to improve in the near future.

April 29, 2021

Business conditions in Maryland strengthened in April, according to the most recent survey from the Federal Reserve Bank of Richmond. The indexes for general business conditions and sales rose from 20 and 8 in March to 32 and 24, respectively, in April. Firms also reported increased expenditures. Survey participants were optimistic that conditions would continue to improve in the coming months.

The United States might benefit from eventually replacing most physical cash with central bank digital currency (CBCD), but first the Federal Reserve must resolve several key policy and implementation issues, such as establishing comparative advantage over private issuers and ensuring safety and soundness.