The Reason That Recession Dates Matter

Asked to define a recession, you can give the mechanical answer. It is 2 or more adjacent quarters of a real GDP decline. So, if Q1 GDP grows by 3%, Q2 by 2% and then Q3 by 1%, is that…

What We Should Know About Monetary Policy

Having heard Janet Yellen’s press conference yesterday, I learned that the Federal Reserve expects that the economy will improve, their bond buying will diminish and, during the foreseeable future, interest rates will start to ascend. And yes, she spoke about unemployment and…

The Monetary Policy Mistakes of a Babysitting Co-op

There once was a French economist whose name was Say. Proclaiming that “Supply Creates Its Own Demand,” Jean-Baptiste Say (1767-1832) entered economic history with Say’s Law. All he meant was that workers are also consumers. The money you receive for producing a good or a service…

Inflation: What A Billion Prices Tell Us

Every year, my class meets Harriet Shaw through a PBS NewsHour broadcast from 1991. An economic assistant for the Bureau of Labor Statistics (BLS), she is a professional shopper who tracks prices. In the newscast, we follow her up and down store aisles until…

Handy Banking Quotes

Car buyers typically display decision fatigue when asked to choose among “4 styles of gearshift knobs, 13 kinds of wheel rims, 25 configurations of the engine and gearbox and a palette of 56 colors for the interior.” Too worn out…

Humor in Fed Transcripts

Below, just a reminder of one piece of the Great Recession before looking at the Fed transcripts. Lehman Brothers is the orange line.   With a typical 5-year lag, the transcripts of the 2008 Federal Open Market Committee (FOMC) meetings…