Fed Policy: The Good, The Bad And The Ugly (Declining Real Household Income, Mortgage Volume)

Confounded Interest ^ | Anthony B. Sanders

[whitedog57]

The next Federal Reserve Open Market Committee meeting in on October 30th, a preview of Halloween. Despite the lack of evidence of positive growth in the economy, The Fed will likely keep on printing.

Two of The Fed’s tools in its arsenal are the Fed Funds rate and longer-term asset purchases (aka, quantitative easing).

So, what is the record on the employment front with regard to Fed policies? Let’s take a look.

Here is a chart of the unemployment rate (white line) compared to the Fed Funds Target rate (gold) and The Fed’s Balance Sheet (longer-term asset purchases).

u3fedpol2

So far, so good. If we focus on the U3 unemployment rate, it appears that Fed policies are helping reduce the unemployment rate by encouraging firms and consumers to borrower at lower interest rates.

If we switch to U6 which includes the unemployed and partial employment, we see that it is improving, but remains high.

u6fedp3

Switching from unemployment rates, let’s look at the employment to population ratio. The good news? The employment to population ratio has stabilized after the Great Recession. The bad news? It is not rising as had been hoped.

emppopfed1

Labor force participation, as I have discussed before, keeps dropping like a paralyzed falcon. True, some of it is the aging of the American population, but that would have shown up in the employment to population ratio as well.

lfpfedpol5

Real median household income? It peaked in 2000 and then again in 2007, but it has been all downhill from there.

realmedfedpol6

Monetary policy has not been able to fix the flat mortgage purchase applications problem.

mbapurchfedpol7

And mortgage volume continues to fall unabated despite voluminous monetary stimulus.

mtgvolfedpol9

To be sure, many of the problems facing America are structural (such as staggering government deficits and runaway entitlements).

But at least house prices at the national level are responding to The Fed’s cheap money strategy.

hpfedpol11

The good: U3 unemployment continues to (slowly) decline.

The bad: U6 unemployment is still unacceptably high.

The ugly: Declining real median household income, declining labor force participation, flat mortgage purchase applications and mortgage volume.

[whitedog57]

Way to go Fed! Keep on doing the same thing EVEN WHEN IT ISN'T WORKING!!!!

[humblegunner]

Here is a chart

Where?

[upchuck]

The next Federal Reserve Open Market Committee meeting in on October 30th, a preview of Halloween. Despite the lack of evidence of positive growth in the economy, The Fed will likely keep on printing.

Two of The Fed’s tools in its arsenal are the Fed Funds rate and longer-term asset purchases (aka, quantitative easing).

So, what is the record on the employment front with regard to Fed policies? Let’s take a look.

Here is a chart of the unemployment rate (white line) compared to the Fed Funds Target rate (gold) and The Fed’s Balance Sheet (longer-term asset purchases).

So far, so good. If we focus on the U3 unemployment rate, it appears that Fed policies are helping reduce the unemployment rate by encouraging firms and consumers to borrower at lower interest rates.

If we switch to U6 which includes the unemployed and partial employment, we see that it is improving, but remains high.

Switching from unemployment rates, let’s look at the employment to population ratio. The good news? The employment to population ratio has stabilized after the Great Recession. The bad news? It is not rising as had been hoped.

Labor force participation, as I have discussed before, keeps dropping like a paralyzed falcon. True, some of it is the aging of the American population, but that would have shown up in the employment to population ratio as well.

Real median household income? It peaked in 2000 and then again in 2007, but it has been all downhill from there.

Monetary policy has not been able to fix the flat mortgage purchase applications problem.

And mortgage volume continues to fall unabated despite voluminous monetary stimulus.

To be sure, many of the problems facing America are structural (such as staggering government deficits and runaway entitlements).

But at least house prices at the national level are responding to The Fed’s cheap money strategy.

The good: U3 unemployment continues to (slowly) decline.
The bad: U6 unemployment is still unacceptably high.
The ugly: Declining real median household income, declining labor force participation, flat mortgage purchase applications and mortgage volume.

[First_Salute]

Mortgage payment money and rent money are going to ObamaCare.

That is something that the limousine liberal landlords did not consider ... except for the limousine liberal landlords who are campaigning to herd people into the LLLs’ ever-more-compact, dense, crowded, crime-plagued, “sustainable living ‘quarters’.”