Beginning in May 2021, 26 U.S. governors announced that their states would end some or all participation in pandemic-related emergency unemployment benefits (EUB) ahead of the federal programs’ September expiration. At the time, some of these governors echoed the concerns of business owners in their states that generous EUB were contributing to difficulties filling job vacancies, which were nearing all-time highs. Twenty-four of the 26 states halted their participation between June 12 and July 3.

The EUB programs were historic, extending the number of weeks individuals could receive benefits, adding $600 per week (later reduced to $300 per week) to recipients’ baseline benefits, and expanding program eligibility to contract and gig workers, who would otherwise not be covered. Many recipients of these enhanced benefits saw a more than one-for-one replacement rate on lost earnings. By contrast, typical pre-pandemic unemployment...

A pandemic-related surge in demand for durable goods and other factors helped push U.S. manufacturing output higher in 2022 than it was before the COVID-19 recession. Overall, U.S. manufacturing added roughly 1 million workers between 2010 and 2021, suggesting that the sector’s long-term decline in employment may have reversed. In an environment where many manufacturers are weighing whether to reshore production, labor shortages may be the greatest long-term obstacle to the sector’s growth.

Firms with more than 500 employees were ineligible for Paycheck Protection Program (PPP) loans, making it important to analyze the changes in employment by firms that were and were not eligible. The pandemic hit small firms, which generally have a smaller financial cushion, harder—especially those in service sectors impacted by social distancing policies and other measures aimed at curtailing the virus’s spread.

The largest program ever targeted to community development lenders offers them unprecedented opportunities to support small businesses and consumers in under-resourced communities.

Community development financial institutions (CDFIs) have long provided access to capital in under-resourced communities and for people with low incomes. This was especially true in the early days of COVID-19, when CDFIs were credited with making Paycheck Protection Program loans to small businesses that were otherwise overlooked by mainstream financial lenders.

In fact, three CDFIs ranked in the top 10 of all 2021 Paycheck Protection Program lenders by volume. Recognizing the important role CDFIs play in the financial system, the federal government in 2021 appropriated emergency support to them and to minority depository institutions (MDIs) through the Emergency Capital Investment Program (ECIP).

Depositories, such as banks and credit...

Immigrants in the U.S. have vastly increased the country's labor supply, bringing along ideas and knowledge from across the world, boosting innovation, growth, and fiscal sustainability.1,2 Yet, despite immigrants accounting for close to 20% of the U.S. labor force, they often do not have an easy time navigating U.S. labor markets. Occupational regulations and licensing, lack of U.S.-specific skills, and outright discrimination, among other barriers, have been previously documented to prevent immigrants from fully achieving their potential—thereby also limiting the aggregate potential of the U.S. economy.

In this essay, we document salient features of the distribution and compensation of immigrant talent across occupations in the U.S. economy. Our goal is to shed light on the extent of immigrant underperformance in U.S. labor markets. 

These empirical findings constitute the starting point of our recent working paper, "The Allocation of Immigrant Talent:...

In October 2021, 136 countries agreed to set a minimum global corporate tax rate of 15% starting in 2023. The Global Tax Deal involves taxing a company's profits in the country where they make sales and establishes a minimum effective corporate tax rate of 15%.1 

The main goal behind the plan is to discourage multinational corporations from shifting profits to low-tax jurisdictions and, according to Treasury Secretary Janet Yellen, avoid a "race to the bottom" with respect to corporate taxes.2 Tørsløv, Weir, and Zucman (2022) estimate that 36% of multinational profits, defined as profits made by multinationals outside of the country where their parent affiliate is located, were shifted to tax havens globally in 2015. One of the biggest channels through which multi­nationals in high-tax jurisdictions take advantage of differences in national tax regimes is the shifting of ownership of their intellectual property (IP) (i.e., patents, design, trademarks, and...

Partly because of the effects of the COVID-19 pandemic, inflation and record deficit spending have been in the news lately. And as the first figure shows, the U.S. debt-to-GDP ratio is at unprecedented levels and the U.S. inflation rate is higher than it has been in decades. This blog post explains the relation between nominal debt and inflation, using government debt as an example.

While a surprising burst of inflation immediately reduces the real value of a borrower’s debt burden—transferring wealth from lenders to borrowers—it is also likely to raise future borrowing costs because investors will then expect higher inflation and demand higher nominal yields on debt to compensate them for the expected loss of purchasing power and the associated uncertainty.

Today, we are highlighting some research the St. Louis Fed has recently produced that you may have missed. The articles below were all published in the Review.

The Blockchain Revolution: Decoding Digital Currencies

This article presents an overview of cryptocurrencies, blockchain technology and their applications, explaining the spirit of the enterprise and how it compares with traditional operations. The authors discuss money, digital money and payments; cryptocurrencies, blockchain and the double-spending problem of digital money; decentralized finance; and central bank digital currency.

Increasing Employment by Halting Pandemic Unemployment Benefits

In mid-2021, 26 states halted participation in all or some federal emergency unemployment benefits (EUB) programs before those programs’ federal funding lapsed. The authors found that terminating these programs early increased employment by 29 people for every...

Firms with more than 500 employees were ineligible for Paycheck Protection Program (PPP) loans, making it important to analyze the changes in employment by firms that were and were not eligible. The pandemic hit small firms, which generally have a smaller financial cushion, harder—especially those in service sectors impacted by social distancing policies and other measures aimed at curtailing the virus’s spread.

The euro hit “parity” with the U.S. dollar for the first time in nearly 20 years on Wednesday, July 13, 2022. That is, the exchange rate dropped to $1.00 per euro. It quickly rebounded and has been hovering around $1.02 at of the time of this writing. What are the forces behind these changes, and how might we use data to illustrate them?

Interest rate parity theory suggests that the interest rate in the U.S. should equal the interest rate in the eurozone, plus the expected depreciation of U.S. currency. The basic assumption underlying this theory is that there is no arbitrage between deposits in different currencies. Thus, if interest rates are higher in the U.S. than in the eurozone, then it has to be the case that the dollar will eventually depreciate (i.e., lose value) vis-à-vis the euro. If markets are expecting the U.S. dollar to depreciate tomorrow, today’s value tends to be high. Thus, exchange rates tend to broadly follow movements in the difference...

Emergency unemployment benefits were introduced early in the COVID-19 pandemic to ease its impact on the U.S. labor market. Over the next year, employment recovered considerably. A 2022 working paper from this article’s authors found that terminating emergency unemployment benefit programs caused a substantial increase in employment. An extension of the working paper’s analysis showed that halting these programs affected the employment of younger and older workers differently.

“FRED is basically a trusted source of economic data,” says Katrina Stierholz, group vice president who oversees FRED at the Federal Reserve Bank of St. Louis. She is joined by Carlos Garriga, senior vice president and research director; Keith Taylor, FRED data officer; and Yvetta Fortova, FRED product owner; in a discussion with Federal Reserve System Chief Innovation Officer Sunayna Tuteja. Listen to the FRED team share the history of this economic data, how they focus on the experiences of FRED users and share their favorite FRED data sets.

Most models in international macroeconomics assume purchasing power parity (PPP) holds in the long run. But what is PPP and what is the long run?

A good starting point is the law of one price (LOP), which states that the same good in different competitive markets must sell for the same price, when transportation costs and barriers between those markets are not important. Intuitively, LOP holds because, if prices were lower in country A and higher in country B, people would simply buy the lower-priced good in country A and sell it in country B at a higher price.

Purchasing power parity (PPP) is the application of LOP across countries for all goods and services—or for representative groups (“baskets”) of goods and services such as those used to compute the consumer price index. If absolute PPP holds, a typical basket of goods in country A has exactly the same price as it does in country B, when prices are expressed in a common currency.

Consider the case of...

Immigrants in the U.S. have vastly increased the country's labor supply, bringing along ideas and knowledge from across the world, boosting innovation, growth, and fiscal sustainability.1,2 Yet, despite immigrants accounting for close to 20% of the U.S. labor force, they often do not have an easy time navigating U.S. labor markets. Occupational regulations and licensing, lack of U.S.-specific skills, and outright discrimination, among other barriers, have been previously documented to prevent immigrants from fully achieving their potential—thereby also limiting the aggregate potential of the U.S. economy.

In this essay, we document salient features of the distribution and compensation of immigrant talent across occupations in the U.S. economy. Our goal is to shed light on the extent of immigrant underperformance in U.S. labor markets. 

These empirical findings constitute the starting point of our recent working paper, "The Allocation of Immigrant Talent:...

Today, we are highlighting some research the St. Louis Fed has recently produced that you may have missed. The articles below were all published in the Review.

The Blockchain Revolution: Decoding Digital Currencies

This article presents an overview of cryptocurrencies, blockchain technology and their applications, explaining the spirit of the enterprise and how it compares with traditional operations. The authors discuss money, digital money and payments; cryptocurrencies, blockchain and the double-spending problem of digital money; decentralized finance; and central bank digital currency.

Increasing Employment by Halting Pandemic Unemployment Benefits

In mid-2021, 26 states halted participation in all or some federal emergency unemployment benefits (EUB) programs before those programs’ federal funding lapsed. The authors found that terminating these programs early increased employment by 29 people for every...

In October 2021, 136 countries agreed to set a minimum global corporate tax rate of 15% starting in 2023. The Global Tax Deal involves taxing a company's profits in the country where they make sales and establishes a minimum effective corporate tax rate of 15%.1 

The main goal behind the plan is to discourage multinational corporations from shifting profits to low-tax jurisdictions and, according to Treasury Secretary Janet Yellen, avoid a "race to the bottom" with respect to corporate taxes.2 Tørsløv, Weir, and Zucman (2022) estimate that 36% of multinational profits, defined as profits made by multinationals outside of the country where their parent affiliate is located, were shifted to tax havens globally in 2015. One of the biggest channels through which multi­nationals in high-tax jurisdictions take advantage of differences in national tax regimes is the shifting of ownership of their intellectual property (IP) (i.e., patents, design, trademarks, and...

Partly because of the effects of the COVID-19 pandemic, inflation and record deficit spending have been in the news lately. And as the first figure shows, the U.S. debt-to-GDP ratio is at unprecedented levels and the U.S. inflation rate is higher than it has been in decades. This blog post explains the relation between nominal debt and inflation, using government debt as an example.

While a surprising burst of inflation immediately reduces the real value of a borrower’s debt burden—transferring wealth from lenders to borrowers—it is also likely to raise future borrowing costs because investors will then expect higher inflation and demand higher nominal yields on debt to compensate them for the expected loss of purchasing power and the associated uncertainty.

The largest program ever targeted to community development lenders offers them unprecedented opportunities to support small businesses and consumers in under-resourced communities.

Community development financial institutions (CDFIs) have long provided access to capital in under-resourced communities and for people with low incomes. This was especially true in the early days of COVID-19, when CDFIs were credited with making Paycheck Protection Program loans to small businesses that were otherwise overlooked by mainstream financial lenders.

In fact, three CDFIs ranked in the top 10 of all 2021 Paycheck Protection Program lenders by volume. Recognizing the important role CDFIs play in the financial system, the federal government in 2021 appropriated emergency support to them and to minority depository institutions (MDIs) through the Emergency Capital Investment Program (ECIP).

Depositories, such as banks and credit...

Most models in international macroeconomics assume purchasing power parity (PPP) holds in the long run. But what is PPP and what is the long run?

A good starting point is the law of one price (LOP), which states that the same good in different competitive markets must sell for the same price, when transportation costs and barriers between those markets are not important. Intuitively, LOP holds because, if prices were lower in country A and higher in country B, people would simply buy the lower-priced good in country A and sell it in country B at a higher price.

Purchasing power parity (PPP) is the application of LOP across countries for all goods and services—or for representative groups (“baskets”) of goods and services such as those used to compute the consumer price index. If absolute PPP holds, a typical basket of goods in country A has exactly the same price as it does in country B, when prices are expressed in a common currency.

Consider the case of...