A reserve currency is held by a nation’s central banks in significant quantities and widely used to conduct international trade and financial proceedings, thus eliminating the costs of settling transactions involving different currencies. Any reserve currency must be easily convertible and have a stable value. The factors that determine the usage of a country’s currency Read more
Economic Outlook
Against the Wind: Headwinds Could Change the Course of the Economy
Throughout 2023, the U.S. economy has stayed resilient in the face of rapid monetary policy tightening; consumer demand has stayed solid, and the labor market has remained unflinching. Gross domestic product (GDP), adjusted for inflation, rose at a 2.4% annual rate in the second quarter, up from a 2% growth rate in the first three Read more
Crosscurrents: Economic Uncertainty
In the first quarter of 2023, the U.S. economy grew by 1.3% on an annualized basis and expanded by less than 0.3% on a quarterly basis. That growth was down from a 2.6% rate in the last three months of 2022, but nonetheless represented a third straight quarter of growth after output contracted in the Read more
Aftershocks: Impact of the Banking Crisis
The current banking crisis rolled on with two key developments in late April. The first was the release of several reports from the Federal Reserve detailing the errors that led up to the collapse of Silicon Valley Bank in March 2023, blaming poor regulatory oversight combined with an absence of risk management for the failure. Read more
Fault Lines: Bank Failures Cause Market Tremors
On March 10 Silicon Valley Bank (SVB) collapsed and was taken over by the Federal Deposit Insurance Corporation (FDIC). This was followed by the collapse of Signature Bank (SBNY) and another takeover by the FDIC takeover on March 12. There followed a period of volatility for the banking sector, turmoil in equity and fixed income Read more
Wait and See: Quarterly Economic Report
The year is coming to an end in an atmosphere of anticipation. Will inflation slow? Will the labor market decline further? Will there be a recession? What will the Fed do? High inflation, rising interest rates, and recession fears have made for a rough financial ride in 2022, with falling stock and bond prices pummeling portfolios Read more