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Economic Research

Firms’ Inflation Expectations Have Picked Up

After a period of high inflation following the pandemic recession, inflationary pressures have been moderating the past few years, dropping from a peak of 9.1 percent in 2022 to 3 percent at the beginning of 2025. However, firms expect both cost and price increases to move higher in 2025, with year-ahead inflation expectations rising from 3 percent last year at this time to 3.5 to 4 percent, though longer-term inflation expectations remain anchored at around 3 percent.

By Jaison R. Abel, Richard Deitz, and Ben Hyman

Comparing Apples to Apples: “Synthetic Real Time” Estimates of R Star

The natural rate of interest, commonly called “r-star,” is the real, inflation-adjusted interest rate expected to prevail when supply and demand in the economy are in balance and inflation is stable. Cho and Williams create new “synthetic real-time” estimates of r-star in the U.S. from the Laubach-Williams (2003) and Holston-Laubach-Williams (2017) models, using vintage datasets. These estimates enable apples-to-apples comparisons of the behavior of real-time r-star estimates over the past quarter century.

By Sophia Cho and John C. Williams

Kartik Athreya on His First Year as Research Director of the New York Fed

Catch up with Kartik Athreya as he answers questions about his experiences in his first year as director of research at the New York Fed. Kartik discusses some of the unique aspects of being a New York Fed economist, ways that researchers have responded to the pandemic, and the topics that have most resonated with him over the past year.

Global Trends in U.S. Inflation Dynamics

A key feature of the post-pandemic inflation surge was the strong correlation among inflation rates across sectors, both in U.S. and other advanced economies. The authors explore the common features of inflation patterns using an extension of the Multivariate Core Inflation Trend (MCT) model. They find that the slow-moving trends seen in U.S. inflation dynamics are not U.S.-specific but are shared by other countries as well—both over a pre-pandemic and post-pandemic sample.

By Ozge Akinci, Martin Almuzara, Silvia Miranda-Agrippino, Ramya Nallamotu, Argia Sbordone, Greg Simitian, and William Zeng

Supply and Demand Drivers of Global Inflation

The authors explore the sources of global inflation trends, which they believe can be traced to factors that may result from correlated or global shocks. They find that most of the movement in inflation trends since the pandemic’s onset were due to adverse supply shocks, and that if central banks had fully committed to offset demand shocks, they would have achieved a modest reduction in global inflation at the cost of a very large contraction in global growth.

By Ozge Akinci, Martin Almuzara, Silvia Miranda-Agrippino, Ramya Nallamotu, Argia Sbordone, Greg Simitian, and William Zeng

U.S. Imports from China Have Fallen by Less Than U.S. Data Indicate

With new tariffs on China back in the headlines, the author explores how much China’s exports have really been affected by multiple rounds of U.S. tariffs and export restrictions over the past seven years. He finds that U.S. imports from China have decreased by much less than has been reported in official U.S. statistics, and that the recent tariff increase on China could have a larger impact on the U.S. economy than is suggested by official U.S. data.

By Hunter Clark

RESEARCH TOPICS

Applied Macroeconomics
and Econometrics Center

The mission of the Applied Macroeconomics and Econometrics Center (AMEC) is to provide intellectual leadership in the central banking community in the fields of macro and applied econometrics.

Data Releases
Global Supply Chain Pressure Index
(Updated: Monthly)

Measuring the Natural Rate of Interest
(Updated: Quarterly)

Multivariate Core Trend Inflation
(Updated: Monthly)

The New York Fed DSGE Model
(Updated: Quarterly)

New York Fed Staff Nowcast
(Updated: Weekly)

Outlook-at-Risk
(Updated: Monthly)

Treasury Term Premia
(Updated: Daily)

Yield Curve as a Leading Indicator
(Updated: Monthly)

Center for Microeconomic Data

Reserve Demand Elasticity (RDE)

RDE estimates provide a quantitative measure of the ampleness of reserves in the U.S. banking system in real time. New data are published monthly.

Decorative Image - variety of polaroid portraits of diverse group of people

EGIs

Broad-based economic indicators that measure macroeconomic outcomes experienced by different demographic, economic, and geographic groups on both a national and regional level.

Corporate Bond Market Distress Index (CMDI)

The CMDI is a summary metric of corporate bond market functioning based on information from multiple sources including measures of primary market issuance and pricing, secondary market pricing and liquidity conditions, and the relative pricing between traded and nontraded bonds. It updates monthly.

Regional Surveys

Monthly surveys conducted by the New York Fed track the sentiment of executives at regional manufacturing and service-sector firms regarding business conditions.

Data Releases
Empire State Manufacturing Survey
(Updated: Monthly)

Business Leaders Survey
(Updated: Monthly)

Regional Business Surveys:
Special Topics
(Updated: Quarterly)

Regional Employment Trends

These interactive charts track employment in state and metro regions in the Federal Reserve’s Second District, utilizing the New York Fed’s early benchmarks of payroll employment data. It updates monthly.

Mapping Home Price Changes

Explore year-over-year changes in home prices since 2003, both regionally and nationally, using this dynamic map — updated with new home price index data on a monthly basis. Hover over a county for granular data.

Early Benchmarked Employment Data

Monthly releases of early benchmarked employment figures for New York State, New Jersey, Puerto Rico, and the U.S. Virgin Islands, as well as the metropolitan areas in New York and Northern New Jersey

The Labor Market for Recent College Graduates

The labor market for recent college graduates improved at the end of 2024. The unemployment rate fell to 4.8 percent; the underemployment rate dropped to 38.7 percent—its lowest level in nearly two years.

Recent Publications

Bank Economic Capital

Assessments of bank solvency are central to the monitoring and regulation of banks. However, conventional measures of bank solvency fail to account for the unique liquidity risks posed by deposits. The authors use public regulatory data to develop a novel measure, economic capital, that jointly quantifies the impact of credit, liquidity, and market risk on bank solvency. They find that bank economic capital is a more timely and accurate indicator of bank health than standard solvency measures.

Beverly Hirtle and Matthew C. Plosser, Staff Report 1144, March 2025

Credit Card Banking

Credit card interest rates in the United States currently average 23 percent, far exceeding any other major type of loan or bond. Why are these rates so high? To find out, the authors analyze credit card lending as an asset class and compare its pricing to other types of lending. They also investigate all the streams of revenues and costs involved in this business, and whether market power plays an important role in them.

Itamar Drechsler, Hyeyoon Jung, Weiyu Peng, Dominik Supera, and Guanyu Zhou, Staff Report 1143, March 2025

The Prudential Toolkit with Shadow Banking

Financial crises involve high social costs, so banks are heavily regulated. Some regulations introduce state-contingency into the returns of short-term creditors while others do not. A major impediment to designing effective regulation is the information gap between banks and regulators, and banks may use shadow technologies to circumvent regulation. The authors study the optimal mix of state-contingent and non-contingent regulation, finding that state-contingent regulation is more likely to be constrained by the threat of shadow banking.

Kinda Hachem and Martin Kuncl, Staff Report 1142, March 2025

All-to-All Trading in the U.S. Treasury Market

Despite the U.S. Treasury market being the deepest and most liquid securities market globally, it has faced several incidents of market disruption in recent years, raising concerns about its resilience. Some market observers have proposed all-to-all trading as a way to ease dealers’ intermediation constraints and promote Treasury market resilience. The authors explore the concept of all-to-all trading in the secondary cash Treasury market and evaluate the benefits and challenges around its adoption.

Alain Chaboud, Ellen Correia Golay, Caren Cox, Michael Fleming, Yesol Huh, Frank Keane, Kyle Lee, Krista Schwarz, Clara Vega, and Carolyn Windover, Economic Policy Review 31, no. 2

Input Sourcing Under Supply Chain Risk: Evidence from U.S. Manufacturing Firms

The past few decades have seen a dramatic transformation in the international organization of production. For many firms, the timely delivery of inputs is a crucial element of the production process. However, increased reliance on imported inputs has exposed firms to a host of supply chain risks that can adversely affect the timeliness of input deliveries. The authors focus on one major source of risk—weather shocks—and how this supply chain vulnerability influences firms’ import behavior.

Joaquin Blaum, Federico Esposito, and Sebastian Heise, Staff Report 1141, February 2025

When It Rains, It Pours: Cyber Vulnerability and Financial Conditions

How does systemic cyber risk interact with other financial vulnerabilities? To study how cyber vulnerability evolves over the financial cycle, the authors analyze the market turmoil at the onset of the COVID-19 pandemic. They find that the systemic consequences of cyberattacks are heightened when markets are more volatile and when financial intermediaries’ balance sheets are strained. Furthermore, official-sector interventions to stabilize financial markets likely have a mitigating, if unintended, effect on cyber vulnerability.

Thomas M. Eisenbach, Anna Kovner, and Michael Junho Lee, Economic Policy Review 31, no. 1

Repo Intermediation and Central Clearing: An Analysis of Sponsored Repo

Through the past decade, the Treasury market has experienced several episodes when market functioning has been severely disrupted. These disruptions highlighted the important role of intermediaries and raised questions on identifying the drivers of spreads charged by these firms. Although significant work has been done considering these issues for some Treasury securities markets, little has been done on sponsored repo, where dealer-to-customer trades are centrally cleared. The authors evaluate the forces behind a dealer-intermediary’s decision to move a bilateral repo transaction with a customer into central clearing.

Adam Copeland and R. Jay Kahn, Staff Report 1140, December 2024

Corporate Debt Structure over the Global Credit Cycle

The authors study the determinants of prepayment at the instrument level for a large cross-section of firms around the world, how such prepayment affects firm-level debt structure, and how global credit conditions affect the ability and willingness of firms to refinance their debt early. Their results show that the impact of global credit conditions on firms' debt structure can be traced back to how instrument-level prepayment incentives change over the global credit cycle.