Inflation Fighter
What’s being done to keep the American economy running smoothly? Who’s keeping watch over things like the employment rate and purchasing power? Does anyone care about the average citizen’s standard of living? In other words, who is the sheriff in town? “What is still bothersome is we haven’t achieved price stability,” said Mary C. Daly, the President and CEO of the Federal Reserve Bank of San Francisco (FRB-SF). She defined price stability as simply: “it’s when people don’t have to worry about inflation.” She identified this as the core mission of the FRB, which “as we all know, has come […]
Energy transitions
As the low-carbon energy transition takes hold, transition risk becomes a hot topic. Various uncertainties, mismatches, and potential obstacles emerge, threatening to delay the changeover. For example, in 2021, the U.K. had to restart coal-fired power plants due to low wind power. Two major transitions in electricity generation are underway. The cost of generating electricity with natural gas has dropped—and the costs of solar panels and energy storage have also dropped. Both are leading to new vistas in power generation. However, “over-investment in CCNG may affect the transition to renewables,” said Gautam Gowisankaram, professor of economics at Columbia University and […]
Transition & Stability
The increasing frequency of extreme weather events in Canada has caused the annual payouts for catastrophic insurance claims to skyrocket, according to a recent Statistics Canada report. This is but one small piece of a global picture emerging, where extreme weather events are causing homeowner insurance to increase at a rate higher than inflation. In the worst case, climate change will cause insurance companies to go bankrupt and homeowners will have nowhere to turn. “Transitions happen shock-wise and are systemic,” said Dirk Schoenmaker, Professor at the Rotterdam School of Management. “What can we do to reduce transition risk?” He was speaking at a webinar […]
Why Don’t ESG Ratings Agree?
ESG (environmental, social, and governance) investing has become a popular choice for many investors. But how reliable are the ratings of the agencies that evaluate stocks for their ESG performance? What kind of discrepancies or “ESG noise” is found among such ratings, and can this be reduced? On October 5, 2023, Roberto Rigobon, assistant professor at the Sloan School of Management at Massachusetts Institute of Technology (MIT), posed these questions during a webinar was part of the series of talks sponsored by the Federal Reserve Bank of San Francisco (FRBSF), titled the Virtual Seminar on Climate Economics. His webinar was […]
Managing Water Risk
Flooding, drought, and the polluted quality of water pose a business risk to the agricultural sector, which affects everything from geopolitical risk to inflation. What is the cause of water risk, and how can it be mitigated? On October 3, 2023, Catherine David, Director of Collaboration and Change at Waste and Resources Action Programme (WRAP) and a specialist in water risk, spoke about water management designed for sustainability. The webinar was sponsored by the Global Association of Risk Professionals (GARP) and was moderated by Jo Paisley, President, GARP Risk Institute. “According to the FAO,” David said, “by 2030, global demand for […]
The Future of Work
Now that the Covid-19 pandemic fears are receding, what is happening to the average workplace—will it become more or less virtual? Will some workers prefer to continue working from home and refuse to commute? As for generative AI—how will that change the future of work? “There will always be work to do, but it will be different from the work we know now,” said Mary C. Daly, President and CEO of the U.S. Federal Reserve Bank of San Francisco (FRBSF), known informally as “the Fed.” She was the introductory speaker on September 8, 2023, at a presentation outlining the Fed’s […]
Shelter Inflation
The welcome news this summer is that the overall rate of inflation is easing up, both in the U.S., where it has dropped to its lowest level in over two years, and to a lesser extent, in Canada, where in July, Canada’s inflation rate fell to 2.8 percent. Gasoline is pulling the inflation rate down, while food and mortgages were pushing it up. How has the U.S. housing market responded to the rise in interest rates? How do recent trends in the cost of house prices and rents affect the likelihood of future shelter inflation? “Various market indicators, including house […]
Heat Lowers the GDP
Every season, but particularly summer, reminds us that global warming is occurring at an alarming rate. The average global temperature will continue to rise over time if people do not take substantial action to reduce greenhouse gases, especially carbon emissions. What effect will soaring temperatures have on economic productivity? How will warming effects be distributed over the globe? Will these have a long-lasting effect on the GDP? Recent research by economists at the Federal Reserve Bank of San Francisco (FRBSF) delves into these questions. “Our findings show that total global losses in output per person could be substantial,” say the […]
Heated Exchange
Climate-related natural disasters are increasing in frequency and severity and costs. Since climate change is not equal across countries, how does a country’s exchange rate respond to such shocks? Furthermore, is it possible to build an economic model to predict future changes? On April 6, 2023, Galina Hale, professor of economics at the University of California at Santa Cruz, delivered a webinar about the effect of climate change on exchange rates. This was part of the series of talks sponsored by the Federal Reserve Bank of San Francisco (FRBSF), titled the Virtual Seminar on Climate Economics. She reported results from […]
Ask the Fed
“The Fed is trying to achieve price stability and maximum employment,” said Sylvain Leduc, Executive Vice President and Director of Research of the U.S. Federal Reserve Bank of San Francisco (FRBSF), known informally as “the Fed.” In terms of employment levels, he said, “We are back to where we were pre-pandemic.” He was speaking on February 7, 2023, at a public briefing in which he outlined the FRBSF’s thinking on economic matters. He showed a graph of unemployment, which reached a peak at the start of the pandemic in early 2020. The monthly change in nonfarm payroll employment had a downward […]