While auto sales have been trending up over the past several months, we'll look into a couple of reasons why the future may not be so bright.
Business Cycles

Economies experience times of growth and times of recession. Learn more about these fluctuations known as business cycles.
Wage-price pass throughs may help explain why core goods inflation has risen so much faster in the current expansion than in previous ones.
Changes in unemployment appear to be strong recession predictors, especially when combined with lagged term spreads.
Moves toward stable inflation and maximum employment can be in conflict in the short term.
Among the topics discussed were income growth volatility, AI's impact on productivity and how housing price changes affect young businesses.
Jason Kosakow and Santiago Pinto describe how survey data is gathered and used to assess regional and national economic conditions. Kosakow is survey director and Pinto is a senior economist and policy advisor at the Federal Reserve Bank of Richmond.
The lockdowns resulting from COVID-19 provide an opportunity to examine what factors affect the strength of supply chains.
Claire Conzelmann, Nicolas Morales, Gaurav Khanna and Nitya Pandalai-Nayar
Hard (or large) sovereign defaults have been associated with larger negative economic responses than soft defaults.
Brandon Fuller, Grey Gordon and Pablo Guerrón-Quintana
A new real-time measure of credit market sentiment appears to outperform credit conditions indicators currently used in the literature.
Danilo Leiva-León, Gabriel Pérez-Quirós, Horacio Sapriza, Francisco Vazquez-Grande and Egon Zakrajšek
The yield curve is often used to gauge potential recessions. Can its predictive value be improved?
While several indicators have pointed to a recent slowdown in economic activity, one that uses unemployment rates to gauge recession probabilities may offer new insights.
Sonya Ravindranath Waddell shares insights from the latest survey of chief financial officers and other financial decision-makers at companies across the United States. Waddell is a vice president and economist at the Richmond Fed.
As the Fed works to contain inflation, many ask whether we are headed into a recession. President Barkin shares his perspective.
Tom Barkin
President, Federal Reserve Bank of Richmond
We search for hysteresis in aggregate post-WWII U.S. data. Our findings suggest that hysteresis effects have been virtually absent for the sample excluding the financial crisis and the Great Recession, and they only appear when including the period following the collapse of Lehman Brothers.
Luca Benati and Thomas A. Lubik
Unlike in other recessions, women's labor force participation was impacted more than men's. What impact did child care have?
How did unemployment insurance expansion affect recovery from the pandemic-induced recession? What are the effects of federal minimum wage hikes? A recent research conference addressed these questions and more.
The unemployment rate is close to pre-pandemic lows, and job openings are at record highs. Yet, participation and employment rates are still below pre-pandemic levels.
The recent high inflation had been due to price changes in a small group of expenditures, but that changed a few months ago.
Studies suggest that short-term effects of such spending are small and long-term effects depend on an economy's sensitivity to such investment.
News about productivity shocks — even when these shocks have not even happened yet — seems to be a powerful additional source of economic fluctuations.
Thomas A. Lubik, Christoph Gortz and Christopher Gunn
Is money essential? How do self-interested parties bargain to achieve mutually beneficial outcomes? These were among questions addressed at a recent research conference.
A surge of interest in starting new businesses could reverse a long-running drought.
The Beveridge curve — which measures the inverse relationship between the unemployment and vacancy rates — has shifted significantly outward and is much steeper than in pre-COVID times.
Felipe Schwartzman and Chen Yeh discuss their research on business cycles and what forces impact them on the individual and aggregate level. Schwartzman is a senior economist and Yeh is an economist at the Federal Reserve Bank of Richmond.
The Fed's relatively new repo facilities may create greater price certainty, but the Fed's intervention may mute valuable market signals regarding economic efficiency and stability.
Huberto M. Ennis and Jeff Huther
Some argue that damages from climate change aren't large enough to affect the financial system, but what about amplification effects?
Unemployment insurance seems to help smooth consumer spending after a job loss, but there's disagreement on how much it discourages people from finding new jobs.
How do local government borrowing, default, and migration interact? We find in-migration results in excessive debt accumulation due to a key externality: Immigrants help repay previously issued debt.
Grey Gordon and Pablo Guerrón-Quintana
Household consumption shocks have accounted for close to 40 percent of pre-pandemic business cycle fluctuations.
University of Texas at Austin economist on wage growth, labor's share of income, and the gender unemployment gap
Contrary to the traditional view, adverse events for a single firm can affect the economy as a whole, if the firm is large enough.
Without a recent directly comparable episode, economic forecasters modified their models or sought additional information in data to create forecasts during the pandemic.
Recent legislation has again highlighted the U.S. welfare system. This EB summarizes the welfare system and a "work bias" embedded in many U.S. welfare programs.
Conducting a statistical analysis of U.S. economic data, economists from the Richmond Fed and the University of Bern find no evidence of hysteresis, the idea that seemingly temporary economic shocks can have permanent effects.
Luca Benati and Thomas A. Lubik
Households' expectations often differ from formal economic forecasts. The researchers quantify these differences and explain them by developing a "theory of time-varying pessimism." Embedding their new theory into a quantitative economic model, they find that fluctuations in pessimism have significant effects on macroeconomic measures, most notably the unemployment rate.
Anmol Bhandari, Jaroslav Borovicka and Paul Ho
The COVID-19 pandemic has caused severe economic distress in the Fifth District, but the regional housing market has proven remarkably resilient.
Benjamin Lukas
Intern (2020)
Much of the previous economic research on the aftermath of recessions has focused on their short-term effects on earnings and jobs. New research suggests that with longer-term consequences, workers' earnings, health and family outcomes may be affected.
Emily Green
This paper identifies total factor productivity (TFP) news shocks using standard VAR methodology and documents a new stylized fact: in response to news about future increases in TFP, inventories rise and comove positively with other major macroeconomic aggregates.
Christoph Gortz, Christopher Gunn and Thomas A. Lubik
Richmond Fed president Tom Barkin discusses economic conditions and the potential for a recession.
Tom Barkin
President, Federal Reserve Bank of Richmond
What caused the housing boom and bust of the early 2000s?
Daisuke Ikeda, Toan Phan and Tim Sablik
Richmond Fed president Tom Barkin discusses economic conditions and the potential for a recession.
Tom Barkin
President, Federal Reserve Bank of Richmond
This Economic Brief evaluates the predictive capabilities of the yield curve and several other leading indicators, including the Conference Board Leading Economic Index (LEI), claims for unemployment insurance, manufacturing activity, consumer lending, and CEO optimism.
Matthew Murphy, Jessie Romero and Roy H. Webb
This brief makes the case that research and policy should focus on four aspects of economic fluctuations: a short-term component (cycles of less than two years), a business cycle component (cycles between two and eight years), a medium-term component (cycles up to thirty-two years), and a long-term component (the trend).
The recent flattening of the yield curve has raised concerns that a recession is around the corner. Such concerns stem partly from the fact that yield curve inversions have preceded each of the past seven recessions.
Renee Haltom, Elaine Wissuchek and Alexander L. Wolman
Small banks do, in fact, play a special role in the intermediation of credit in the U.S. economy. But when the cyclical properties of NIM are decomposed into the asset and liability sides of the balance sheet, it appears that the liability side drives the difference in the performance of small and large banks.
Borys Grochulski, Daniel Schwam, Aaron Steelman and Yuzhe Zhang
A downturn following the collapse of an asset bubble — an episode of speculative booms in asset prices — can be severe and sustained, with output and employment often lower than in the prebubble economy. This Economic Brief considers some possible theoretical explanations.
Helen Fessenden and Toan Phan
Economic growth in the United States following the Great Recession has been well below the post-World War II average. Some observers have called this the "new normal."
Aaron Steelman and John A. Weinberg
Real business cycle (RBC) models have been highly successful at explaining business cycles that occurred before 1984. But since then, shifts in comovements and relative volatilities of key economic aggregates have challenged their preeminence.
Thomas A. Lubik, Karl Rhodes, Pierre-Daniel G. Sarte and Felipe F. Schwartzman
Are the majority of inner cities experiencing a renaissance thanks to rapid gentrification, or is growth limited to a small number of high-technology regions, resulting in inequality among metropolitan areas?
Aggregate demand is the total demand for all goods and services in an economy. Should the government try to boost it with fiscal stimulus during recessions?