The Federal Reserve's interest rate decisions shape the economic landscape, influencing borrowing costs for everything from mortgages and auto loans to business investments. These policy changes directly affect whether businesses expand operations, invest in equipment, or increase staffing. At Employ America, we research how the Fed can better balance its dual mandate, advocating for approaches that prioritize achieving and sustaining full employment while utilizing more targeted tools to address inflationary pressures.
Monetary Policy
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Read the Latest
55 Posts
Nov 16, 2023
In this piece, we’ll take a look at how the Fed’s thinking on the labor market has changed as the data validated or disproved various hypotheses in 2023.
Oct 02, 2023
This is the first of our Fed Research Roundup series. In this post, we examine the question of whether monetary policy constrains the supply-side, and what that means for inflation.
In a recent Barron’s article, I examined why last year’s predictions that fighting inflation would require an increase in the unemployment rate went so wrong. The flaws in these predictions can be traced back to three ideas: first, that vacancies are a good measure of labor market tightness; second
Labor Markets
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Aug 24, 2023
Summary Inflation and interest rates remain high enough that now is not a time for 'soft landing' victory laps, but the growing and broadening evidence of price deceleration warrants a deeper dive. If the Fed's role in achieving disinflation runs through "cooling real demand,"
Core Inflation
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Apr 17, 2023
Summary: If we focus on the domestic labor that contributes to "Core Services Ex Housing PCE" output, we see that wage growth is no longer looking so hot. Labor cost pressures on "Core Services Ex Housing" PCE inflation are diminishing. Within the Fed's preferred
While there are prescriptive upshots to this piece, this piece is meant to get at the core descriptive points about how monetary policy works. There is plenty of room to debate optimal policy and optimal macroeconomic objectives, but we should first be clear about what the Fed's approach
Mar 21, 2023
If you enjoy our content and would like to support our work, we make additional content available for our donors. If you’re interested in gaining access to our Premium Donor distribution, please feel free to reach out to us here for more information. Summary The tension between the Fed’
Fed Policy
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Mar 16, 2023
It has now been almost exactly one year since the Fed started raising interest rates to combat inflation. When they started raising rates, the unemployment rate was at 3.6%. In February, the unemployment rate was… also at 3.6%. Even construction employment, a notoriously interest rate sensitive sector, remains
Mar 15, 2023
We try our best not to "bash" the Fed gratuitously; we believe that strong public institutions are important for solving society's biggest problems. But the events over the past four days should not be sugar-coated: we have a substantial Fed failure on our hands. We have
