How hateful rhetoric connects to real-world violence |
- COVID-19 is a developing country pandemic
- Partnerships for public purpose: The new PPPs for fighting the biggest crises of our time
- The American Families Plan: Too many tax credits for children?
- Hutchins Roundup: Mortgages, recruitment, and more
| COVID-19 is a developing country pandemic Posted: 27 May 2021 02:43 PM PDT By Indermit Gill, Philip Schellekens "Has global health been subverted?" This question was asked exactly a year ago in The Lancet. At the time, the pandemic had already spread across the globe, but mortality remained concentrated in richer economies. Richard Cash and Vikram Patel declared that "for the first time in the post-war history of epidemics, there is a reversal of which countries are most heavily affected by a disease pandemic." What a difference a year makes. We know now that this is actually a developing-country pandemic—and has been that for a long time. In this blog, we review the officially published data and contrast them with brand new estimates on excess mortality (kindly provided by the folks at the Economist). We will argue that global health has not been subverted. In fact, compared to rich countries, the developing world appears to be facing very similar—if not higher—mortality rates. Its demographic advantage of a younger population may have been entirely offset by higher infection prevalence and age-specific infection fatality. Official data: Developing countries account for half of global mortalityThe statement that this is a developing-country pandemic is not self-evident when we look at the official statistics (Figures 1 and 2). When it comes to per capita mortality, the official data suggest that the pandemic has been most intense in high-income countries (HICs). Cumulative mortality rates and—with a few exceptions—daily mortality rates have been higher for richer countries. Most people don't look any further and decide that HICs have suffered more.
But it is necessary to also consider mortality shares. Mortality rates measure intensity, which highlights country performance, but they do a poor job in reflecting the contribution to global mortality. Given that the developing world is both younger and more populous than the HICs, we would expect its mortality rates to be lower and its mortality shares to be higher. Official data indeed show that the developing-country share in cumulative mortality is high: slightly above 50 percent (Figure 3). This wasn't always the case: The global mortality distribution has seen big swings since the onset of the pandemic. One upper-middle-income country (UMIC) dominated the global death toll initially: China. Soon after, outbreaks in HICs lifted their share in global mortality to almost 90 percent. A shift to UMICs followed, then quickly to lower-middle-income countries (LMICs). When winter came to the northern hemisphere, a new wave drove up the HIC share. More recently it has again started to recede. Throughout the period, the reported share of low-income countries (LICs) remained negligible.
The daily mortality distribution puts into sharper focus the most recent trends (Figure 4). The good news is that, in part thanks to vaccines, HIC mortality rates have plummeted. The bad news is that rates have spiked in LMICs and remain at high levels in UMICs. As a result, 2021 saw a complete shift in the daily mortality distribution: The LMIC share rose from 7 to 42 percent; the UMIC share from 33 to 42 percent; and the HIC share dropped from 59 percent to 15 percent—a trend that may become more pronounced in coming months. Excess mortality estimates: The share of developing countries may be as high as 86 percentThe Economist has just published new estimates of excess deaths. Excess deaths measure the difference between observed and expected deaths throughout of the pandemic. Previously confined to mainly the richer countries, excess deaths are thanks to the new estimates available for the entire world. A gradient-boosting machine-learning algorithm helped fill the data gaps on the basis of 121 predictive indicators that are comprehensively available. With this method, global excess deaths are estimated at 7 million to 13 million, with 10 million as the midpoint. Figure 5 shows the detailed results by World Bank income classification. Two patterns are striking:
Perhaps the most striking result is the compression of mortality rates across income groups (Figure 6). Mortality rates in LMICs are the highest (157), then UMICs and HICs (both 118) and then LICs (98). But relative to the dispersion seen in the reported COVID-19 mortality rates (Figure 1), one could say they're "about the same." These estimates are subject to uncertainty, but the 95% confidence intervals are considerably above the reported mortality COVID-19 rates, particularly among UMICs and LMICs (which together represent 75 percent of the world's population).
The midpoint estimates entail a completely different mortality distribution (Figure 7). If the midpoints hold true, the developing world may account for 86 percent of global mortality (as of May 10). This compares to a share of 55 percent using officially reported data. The biggest increases are in the share of LMICs and LICs. While virtually all developing countries are contributing to the rise (see Figure 5), rising mortality rates in the developing world's most populous countries will produce the largest absolute impact on global mortality. We can see this very vividly in Figure 8, which shows the cumulative death toll in millions of souls. The tragedy that continues to unfold in India has claimed a very large death toll of close to 3 million. While considerable uncertainty surrounds these estimates, alternative methods suggest they are in the ballpark.
Demographic advantage squanderedIt is useful to do a thought experiment (Figure 9). Imagine all countries—rich and poor—faced the same epidemiological odds; that is, suppose that everyone has the same chance of getting infected and everyone faces the same age-specific fatality rates. Under these conditions, we would capture the pure effect of demography on the mortality distribution and obtain an estimate of the demographic advantage of the developing world. In such a scenario, we expect the developing-world share in global mortality to be around 69 percent (Figure 9, middle bar in red). Applying common epidemiological parameters to the developing world boosts their share in global mortality because of the large absolute numbers of elderly. Though developing countries are younger, they are much more populous. As a result, the 60+ population of the developing world is 2.4 times larger than its counterpart in HICs. India alone, for example, counts 140 million people over 60; this is three times the number in Japan, which has the world's oldest population after Monaco. The generally younger age distributions of the developing world were believed to protect against a pandemic that discriminated against older people. The fact that the excess mortality shares (Figure 9, dark blue bar on the right) are significantly higher suggests that developing countries have likely squandered their demographic advantage as mortality is higher than demography alone would indicate. In other words, developing countries likely face worse epidemiological odds in the form of higher infection prevalence and/or more elevated age-specific infection fatality risk.
We can think of many structural reasons why that would be the case. Infection prevalence has likely been fueled by environmental factors such as urban density as well as poverty and informality, which complicate physical distancing. Over 1 billion people, mostly in developing countries, live in slums. Flattening the curve will therefore be more difficult in many developing countries, meaning that preexisting health capacity constraints will become binding more quickly. Age-specific infection fatality rates are also likely more elevated than in HICs. Comorbidities are highly prevalent in the developing world. Of the 1.1 billion people with hypertension, two-thirds live in developing countries. Over the last decade, the number of cases and prevalence of diabetes has risen most quickly in the developing world. Moreover, limited access to quality health care in developing countries would mean that many ailments would be left untreated or undertreated, heightening vulnerability. Official data point to a big shift in the mortality distribution to the developing world in recent months. Excess death estimates suggest that developing-country shares have been much higher than previously thought. Regardless of what the precise channels have been, one conclusion is clear: This is now—and has for a long time been—a developing-country pandemic.  This posting includes an audio/video/photo media file: Download Now |
| Partnerships for public purpose: The new PPPs for fighting the biggest crises of our time Posted: 27 May 2021 02:26 PM PDT By Amel Karboul, Emily Gustafsson-Wright, Max McCabe We are currently facing some of the biggest crises of our time—climate change, learning loss, global health inequities, and more—and we need new approaches if we are to make meaningful progress toward tackling them. While there is no doubt that government plays an important role in helping to solve these critical issues and support social service programs to combat them, it has long been recognized that the private, or nonstate, sector has the potential to bring a multitude of benefits in either the delivery or financing of those services through public-private partnerships (PPPs). We see great potential for a new type of PPP—partnerships for public purpose* (new PPPs)—which emphasizes not whether the partner is from the public or private sector, but whether these collaborations and their impact have a publicly oriented purpose. Reimagining public-private partnershipsPPPs have existed since at least the Roman Empire—in the form of concessions —for the construction of public baths and roads and the management of public markets. In fact, when most people think of PPPs, this Roman model is often what they picture—an antiquated model of government infrastructure outsourcing that pits public interest against private financial interest, rather than fostering collaboration, as the term partnership would imply. Furthermore, in this old model, the "private" sector implies for-profit industries, and thus nonprofit, third-sector, social-enterprise, and other stakeholders are often excluded. PPPs must evolve beyond this traditional definition in order to meet this moment. Partnerships for public purpose, on the other hand, put the emphasis on multilateral relationships that support sustainable, long-term, and systemic impact. Instead of being constrained by private finance contracts or by cost-reduction strategies, these new PPPs encourage true partnerships with a diversity of stakeholders. By harnessing the technical expertise, approaches, and networks possessed by governments, private-sector organizations, nongovernmental actors, and donor agencies, these new PPPs can provide innovative mechanisms and promote collaboration to address challenges that traditional government resources and competing priorities struggle to negotiate. In doing so, they can increase capacity, improve quality, enhance equity, and target poor or marginalized populations for the delivery or financing of services. An increasing number of these new PPPs are being put into practice and delivering results for citizens around the world. Over the past decade, outcome-based financing mechanisms such as social, development, and environmental impact bonds (SIBs, DIBs, and EIBs), as well as outcomes funds, have arisen as key forms of these new PPPs. These mechanisms bring together multiple stakeholders, which could include governments, NGOs, social enterprises, donors, and investors, to collaborate and deliver a set of outcomes—paying only when results are achieved. In an impact bond, investors (often impact investors) provide risk funding for social services programs, and this investment is repaid—oftentimes with a return—based on the program's achievement of predetermined social and/or environmental outcomes. Outcomes funds pool funding to pay for outcomes in a particular issue or geographic area, potentially for distribution across many impact bonds. For more on how these mechanisms work, see “Impact bonds in developing countries: Early learnings from the field.” What makes impact bonds and outcomes funds partnerships for public purpose?Impact bonds and outcomes funds foster deep partnerships through various mechanisms inherent to the model. First of all, they bring together a multitude of actors that often don't sit together at the table and—since they require the expertise and contributions of all stakeholders involved—each is dependent on the others for the initiative to function. Furthermore, while these mechanisms often face criticism for being costly and labor intensive to design, the time and resources dedicated upfront and throughout impact bond and outcome funds projects creates both collective accountability and ownership of the results. Finally, the model has the potential to create true partnerships with the beneficiaries themselves, who best understand their own needs, by including them in the design of the initiatives. These models are also designed with public purpose at the fore, since the focus is on successful achievement of outcomes, such as improved learning levels or gainful and sustained employment. Moreover, since impact bonds and outcomes funds allow for the tailoring of services to disadvantaged populations, they can provide more comprehensive support across multiple sectors or issue areas, which can benefit all of society. In addition, these models ensure that public spending is effective: Tax dollars are not wasted on social services that don't work, and they can reduce costly remedial services and increase benefits further down the road.
Impact bonds have already demonstrated their potential to help address a range of social issues in high-, middle-, and low-income countries, with over 200 implemented across 35 countries, including 19 in developing countries. Some examples of impact bonds achieving public good include a program to improve learning outcomes of over 200,000 disadvantaged children across four states in India, an initiative aimed at improving livelihoods by supporting first-time entrepreneurs in Kenya and Uganda, and a program in Israel focused on the prevention of Type 2 diabetes. Another impact bond, the Impact Bond Innovation Fund, brought together a multitude of actors including a local government agency, several philanthropic entities, a university, and both a local and an international NGO to support an early childhood development program for marginalized children in the Western Cape in South Africa. Several outcomes funds have also been established, and additional ones are being designed. One example is the Education Outcomes Fund (EOF), an effort to significantly improve learning and employment outcomes by tying funding to measurable results. EOF partners with governments, donors, implementing partners, and investors to achieve concrete targets for learning, skill development, and employment. With initial projects in Ghana and Sierra Leone, this approach is being scaled up with the aim of transforming the lives of 10 million children and youth around the world. EOF has recently joined the United Nations as a hosted partnership—showing the growing institutionalization of this model. Conclusion: Where do we go from here?While the past decade has seen significant growth in new ways for private, public, and third-sector actors to work together in partnership, thus far many of these initiatives have been on a small scale. What will it take to expand this model? Seeding and institutionalizing an outcomes-focused mindset at all levels of government, among international agencies, and within nonprofit service providers is the first step. This will require risk-taking, the willingness to rethink traditional models, and the agility to go big. It will also necessitate capacity building of all stakeholders to engage in this new way of working. Models like EOF and other outcomes funds are laying the path for large-scale partnerships that place beneficiaries at the forefront. Now more than ever, as the world is building back after the COVID-19 crisis, we will need strong partnerships that support public purpose in a cost-effective and impactful way. Impact bonds, outcomes funds, and other partnerships for public purpose (new PPPs) have the potential to support this recovery while strengthening social service delivery and, in essence, changing its DNA. *Note: The authors borrowed the term "partnerships for public purpose" from K. Srinath Reddy in "The Convergence of Infectious Diseases and Noncommunicable Diseases: Proceedings of a Workshop (2019).”  This posting includes an audio/video/photo media file: Download Now |
| The American Families Plan: Too many tax credits for children? Posted: 27 May 2021 09:00 AM PDT By Isabel V. Sawhill, Morgan Welch The American Rescue Plan Act (ARP), which was signed into law by President Biden in March of 2021, provided relief to Americans and businesses suffering from the COVID-19 pandemic. The Act included major reforms to three tax credits aimed at supporting families: the Earned Income Tax Credit (EITC), the Child Tax Credit (CTC), and the Child and Dependent Care Tax Credit (CDCTC). The Administration now proposes either to extend those reforms or to make them permanent in the $1.8 trillion American Families Plan (AFP). While these reforms are commendable, they are complicated and may miss an opportunity to rethink what goals we are trying to accomplish with these tax credits, and how best to achieve them. First, three different tax credits leave it up to families to navigate a bewildering set of eligibility rules and benefits. Second, they come with a very high price tag that may not be fiscally sustainable over the longer run without major and politically fraught tax increases. Third, if we are going to spend this much money, we should think carefully about what it will do – not just to reduce child poverty in the short-run, but to expand opportunity and social mobility in the longer run. President Biden has paved the way for bold, new ideas, but now is the time to build back better, to reimagine the system in a way that is simpler, more cost-effective, and easier for workers and families to navigate. For example, in an earlier analysis of various tax credit proposals, Sawhill and Pulliam showed that if the goal is to reduce poverty, a high priority should be to make the existing CTC fully refundable, but taking total program cost into account, nothing can beat the EITC as the best overall way to reduce child poverty. The EITC not only provides subsidies to families with children but, because it encourages work, it also boosts a family's own earnings and puts them on a path to being self-supporting. Because of its effects on earnings, it leverages taxpayer dollars to accomplish more poverty reduction for the same expenditure of funds (as we show in Figure 2). The fact that the expansion of the CTC (as included in the ARP) reduces child poverty by almost half is impressive but should not obscure the fact that there could be better, more targeted, and more effective uses of the same money. By simplifying existing tax credits, creating strong incentives for work, better targeting the funds to those who need them most, and allocating more to improving children's longer-term prospects, we might accomplish even more. The President has emphasized that he welcomes new or better ideas for accomplishing these objectives. It is in that spirit that we offer these comments. THREE CHILD TAX CREDITS AND THEIR PROPOSED EXPANSIONSThe remainder of this brief is primarily devoted to reviewing the three tax credits that President Biden proposes to expand. In addition to providing a primer on these credits, we hope to convince the reader that their complexity is daunting even to the experts, much less to the average family. With most adults now expected to work and a rising proportion being both the primary breadwinner and the sole parent in a family, finding the time to learn about and apply for all these programs could be intimidating. This complexity also leads to high error rates and some fraud, undermining the integrity of the programs. We end with some comments on how the system might be simplified along with some broader questions about the best way to allocate whatever funds are available. Earned Income Tax Credit (EITC)The EITC provides extensive subsides, tied to work, to families on the lower rungs of the income distribution. However, it has been long criticized for providing little to no benefits for workers without children. As highlighted in Table 1 below, the ARP included a substantial expansion in the maximum EITC benefit for childless workers from about $500 to $1500. This expansion will help reach more than 17 million low-income Americans, according to the Center on Budget and Policy Priorities. Although these are adults living without children, many are nonresident fathers or are young adults trying to get started in a career that will enable them to form a family. Research suggests the childless benefit will encourage work, although mostly among women and the most disadvantaged men. TABLE 1 Sources: Income Limits and Range of EITC (IRS, 2020); Estimates of Federal Tax Expenditures for Fiscal Years 2020-2024 (The Joint Committee on Taxation, 2020); House COVID Relief Bill Includes Critical Expansions of Child Tax Credit and EITC (CBPP, 2021); What’s in President Biden’s American Families Plan? (Committee for a Responsible Federal Budget, 2021). The EITC is the most effective tax credit at reaching those in the bottom of the income distribution. Figures 1a and 1b show the distribution of benefits for the EITC, CTC, and CDCTC pre- and post-ARP for each income group. Even before the passage of the ARP, the EITC was clearly the winner in targeting the bottom two quintiles and remains so with the ARP expansions, with over half of the benefits going to the lowest quintile. It's also true that the reforms of the CTC at the bottom of the income scale, by themselves, are a very cost-effective way to reduce poverty. There is little merit, on the other hand, to both raising and expanding CTC benefits to higher-income families. Child and Dependent Care Tax Credit (CDCTC)The CDCTC provides tax credits to families for a portion of their child care expenses. However, it is nonrefundable and thus does not benefit Americans with the lowest incomes. In fact, its benefits are heavily skewed toward families making more than $100,000 a year. As highlighted in Table 2, the ARP would substantially expand the credit by making it fully refundable and by boosting the credit, and the AFP would make these changes permanent. The AFP contains other supports in addition to the CDCTC to make child care more affordable and improve training for providers. Specifically, child care would be free for low-income families. Families earning up to 1.5 times their state's median income would pay for child care based on a sliding scale, but no more than 7 percent of their income would go to child care. In addition, universal pre-k programs would allow parents to remain attached to the workforce during a child's early years, and help to ease the pressure to balance work and family life. Thus, President Biden’s plan includes multiple ways to make child care available or affordable; the tax credit is just one of them. TABLE 2 Sources: Child and Dependent Care Tax Benefits: How They Work and Who Receives Them (CRS, 2021); Estimates of Federal Tax Expenditures for Fiscal Years 2020-2024 (The Joint Committee on Taxation, 2020); The Child and Dependent Care Tax Credit (CDCTC): Temporary Expansion for 2021 Under the American Rescue Plan Act of 2021 (ARPA; P.L. 117-2) (CRS, 2021); What’s in President Biden’s American Families Plan? (Committee for a Responsible Federal Budget, 2021). Child Tax Credit (CTC)Pre-ARP, the CTC was not fully refundable, so it provided relatively fewer benefits to those with little or no income tax liability. It also extended far up the income distribution. Single parents making up to $200,000 and married couples making up to $400,000 received the full credit. While under pre-ARP law, the CTC was partially refundable, many have called for the tax credit to be made fully refundable in order to help those at the bottom of the income distribution. As shown in Figures 1a and 1b above, in 2021 (pre-ARP), about 11% of the CTC's benefits went to families in the lowest quintile, while nearly 40% went to those at the top of the income distribution, in the fourth and fifth quintiles. The CTC pre-ARP is much more costly than the EITC, with federal expenditures on the EITC totaling over $67 billion in 2020, as compared to the $112 billion spent on the CTC. The EITC is also much more effective at targeting funds to lower income families. Figure 2 below shows the change in after-tax income pre-ARP, per $100 billion. By adjusting for the cost of the program, it becomes even clearer that the CTC has not been as effective at reducing poverty. The expansions proposed in the ARP (Table 3) address some of these issues. They make the CTC fully refundable, thereby reaching millions of the very poorest families and substantially increasing the CTC for millions of working-poor families that previously were able to get only a partial, and often quite-modest, credit. The Biden Administration has proposed making the full refundability permanent, an action that has been called for by many experts, and would ultimately make the CTC more progressive and much more effective at reducing poverty. Additionally, under the ARP, the credit is bumped up from $2,000 to $3,600 for children under 6 and to $3,000 for children 6-17 with the benefit starting to phase out at $75,000 for single filers, $112,500 for head of household filers, and $150,000 for joint filers. These changes are expected to reduce poverty by 45%, according to Columbia University's Center on Poverty and Social Policy. TABLE 3 Sources: The Child Tax Credit: Primer (Tax Foundation, 2020); Estimates of Federal Tax Expenditures for Fiscal Years 2020-2024 (The Joint Committee on Taxation, 2020); What is the child tax credit? (Tax Policy Center, 2021); House COVID Relief Bill Includes Critical Expansions of Child Tax Credit and EITC (CBPP, 2021); What’s in President Biden’s American Families Plan? (Committee for a Responsible Federal Budget, 2021). The ARP was a $1.9 trillion emergency relief bill. The plan was an aggressive response to a pandemic that left Americans without economic security, jobs, and other needed benefits. But once the emergency is over, we should question the merits of a permanent expansion of all of these child tax credits. While the CTC expansion proposed under the AFP has been applauded by many for its antipoverty effects, it is extremely costly. According to estimates from the Committee for a Responsible Federal Budget, the expansion of the CTC could cost $450 billion over the next 10 years, assuming that the expanded benefits amount will only continue through 2025. If the expanded credit amounts, as well, are continued after 2025, we are looking at a 10-year estimate of $1.2 trillion for the program. IS THERE A BETTER APPROACH?These concerns about cost, about complexity, about targeting, and about the long-term effects on social mobility, as opposed to effects on short-run poverty, lead us to suggest the following:
CONCLUSIONThe proposals being introduced by President Biden have the potential to dramatically benefit working- and middle-class families, many of whom are struggling to recover from the COVID-19 pandemic, support their families, and invest in their futures. However, we shouldn't build off of a problematic system. The child tax credits as currently proposed overlap with each other and impose unnecessary administrative burdens on families. Expanding the EITC while making the earlier CTC level of $2,000 per children fully refundable and permanent, and eliminating the CDCTC entirely would free up spending to allow us to invest in long lasting changes, such as universal Pre-K, child health and nutrition, a better child care and teacher work force, afterschool programs and the like. Many will complain that this substitutes public programs for parental choice. We disagree and instead argue that the best way to give parents more choice is to simply eliminate income taxes, at least for all working-class families, and to expand the EITC. President Biden has argued that this is the time for bold action. We should harness this opportunity to transform our system to support working families, by making the tax credits simpler and more targeted to those in need. At the same time, we need to invest in a high-quality education and care infrastructure that serves all families, and not just those with the ability to pay.  This posting includes an audio/video/photo media file: Download Now |
| Hutchins Roundup: Mortgages, recruitment, and more Posted: 27 May 2021 08:00 AM PDT By Sophia Campbell, Nasiha Salwati, David Wessel Studies in this week's Hutchins Roundup find mortgage rates in 2020 did not fall as much as interest rates, high unemployment increases recruiting costs for firms, and more. Want to receive the Hutchins Roundup as an email? Sign up here to get it in your inbox every Thursday. Declines in interest rates in 2020 not fully passed through to mortgage ratesWhile 2020 saw the lowest mortgage rates for borrowers in decades, an increase in markups by intermediaries kept mortgage rates from falling as much as Treasury rates, find Andreas Fuster of the Swiss National Bank and co-authors. They say, "Hiring new workers and expanding capacity was more difficult than usual," making the rise in markups even larger than is typical when demand for mortgages rises. In addition, they find that fintech lenders, whose technology-based operations faced fewer pandemic-related frictions, gained market share for complex and labor-intensive mortgages. The authors also find that government-backed credit guarantees and quantitative easing by the Federal Reserve helped to support credit supply in the mortgage market, keeping rates from rising for the typical mortgage despite higher risk of borrowers defaulting due to the pandemic. Government guarantees are unable to eliminate all risks to lenders, however. Lending to higher risk borrowers decreased in the mortgage market. Workers apply to more jobs in a recession, making it harder for firms to assess who is a good fitUsing data on both employed and unemployed workers from the Survey of Consumer Expectations, Niklas Engbom of New York University finds that changes in job search patterns during recessions raise recruiting costs and discourage job creation. In particular, he finds that the unemployed apply for 10 times more jobs than employed workers but are less than half as likely per application to take a job. Unemployed workers also are less selective about the vacancies for which they apply, costing firms more time and resources to find a good fit from the large pool of applicants. As recruiting costs increase, fewer jobs are created, and high unemployment rates persist. Though an application fee could discourage low quality applicants, the author speculates that firms may worry that fees could discourage low-income but suitable candidates from applying. New survey data suggests US firms' inflation expectations are uninformed by monetary policyUsing a new survey of U.S. firms' inflation expectations over time, Yuriy Gorodnichenko and Bernardo Candia of the University of California, Berkeley, and Olivier Coibion of the University of Texas at Austin find that the inflation expectations of U.S. firms are poorly anchored, and that firms' decisions are not informed by monetary policy. When it comes to inflation expectations, firms behave more like households than professional forecasters. Like households, firms tend to forecast inflation to be higher than its current trend. There is also less consensus among firms about future inflation – however, most predict long-run levels of inflation to be significantly different from the Federal Reserve's inflation target of 2%. The authors find U.S. firms' inattention to inflation dynamics to be consistent with data from other developed economies. "The now long history of low and stable inflation in most advanced economies has removed much of the incentive that firms may have had to pay much attention to monetary policy and inflation," the authors conclude. Chart of the week: US home prices surged 13.2% from March 2020
Source: S&P Global Quote of the week:"One of the things that’s been very interesting about this pandemic, and actually was evident very early on, is that demand has responded much faster to the marketplace than supply has, and it has taken supply time to catch up. We’re seeing this in a number of different ways, whether it be semiconductors or lumber response for housing or even appliances and their availability for families that are looking to upgrade at their homes. The question is not whether there is that imbalance that happens initially, it is whether that persists over time." says Raphael Bostic, President of the Atlanta Fed. "And as I’ve talked to business leaders, what they’ve said is that for many of these things, you’re not expecting them to really last for an extended period. The dynamic that we’re seeing now is not the new steady state dynamic. So there’s a reason to be less concerned. But I do want to emphasize [that] that’s why we talk to people on a repeated basis. I want to know whether their views on this are changing, because if they are changing then that will lead me to have to rethink where our policy should be."  This posting includes an audio/video/photo media file: Download Now |
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