john williams

Robin Harding

The main paper at today’s US Monetary Policy Forum in New York, organised by the University of Chicago’s Booth business school, is about housing.

Written by Michael Feroli of JP Morgan, Ethan Harris of BoA Merrill Lynch, Amir Sufi of the Booth school, and Kenneth West of the University of Wisconsin, it’s a comprehensive breakdown of the channels through which the housing bust continues to affect the recovery and well worth a read. Not only for its assessment of the housing market, but also on the implications for policy. Read more

Robin Harding

For my money the most interesting piece of Fedspeak today was some coded support for further easing from John Williams of the San Francisco Fed. Mr Williams wasn’t exactly gung ho, but his words were fairly clear.

“Right now, though, the real threat is an economy that is at risk of stalling and the prospect of many years of very high unemployment, with potentially long-run negative consequences for our economy. There are a number of potential steps the Fed could take to ease financial conditions further and move us closer to our mandated goals of maximum employment and price stability. Of course, these “treatments” won’t make our economic problems go away and their costs and benefits must be carefully balanced. But they could offer a measure of protection against further deterioration in the patient’s condition and perhaps help him get back on his feet.”

Mr Williams also set out an economic forecast that is notably grim on unemployment. He forecast 2 per cent annualised growth in the second half of 2011, but unemployment above 9 per cent at the end of this year, and most importantly, above 8.5 per cent at the end of 2012. Mr Williams also referred to ‘stall speed’ implying that he sees plenty of downside risk. You would certainly want to ease with that forecast. Read more

Robin Harding

John Williams, the new president of the San Francisco Fed, has delivered his first speech. It wasn’t a thriller but I guess his term will be long enough that he need not hurry to excite the markets.

Mr Williams stuck to mainstream Fed thinking but he did set down a few markers. He forecast that growth will bounce back to above 3 per cent for Q2, that total growth for 2011 will be about 3.25 per cent, and that unemployment will end the year at 8.5 per cent. He also sets out his preferred inflation objective of 2 per cent – putting him with the large majority of the FOMC. Read more

Robin Harding

After a five month recruitment process, the San Francisco Fed has appointed a president from within, its research director John Williams.

The appointment of another highly-respected economist (#329 on the RePEc list) as a regional Fed president is the latest in a trend after Narayana Kocherlakota (#262) in Minneapolis, James Bullard (#738) in St Louis, Charles Evans (#205) in Chicago and Eric Rosengren (#663) in Boston.*

It reflects the evolution of the regional Feds: as the banking industry consolidates and payments systems centralise they are becoming less banks and more economic research centres. The role of the regional Fed president, increasingly, is defined by the ability to hold your own and contribute to debate on the FOMC. Read more