2018-09-10参加美联储午间交流会

CABE Luncheon Federal Reserve ChicagoIt was my great honor to attend the luncheon organized by Chicago Association for Business Economics. The speaker was Bill Strauss, the senior economist and advisor of Fed Chicago.Indifferent from China’s banking regulation system, America has many regulators, and both Federal and States have different legislations, which make the banking regulation more complex than any other countries. However, we must admit that America still is among the most efficient regulation systems. My intern mentor always encouraged me to explore the regulation system, so when I knew that there was going to be a luncheon, I took it.The meeting was held on the 3ed floor of Fed Chicago. To get into it, you must make a reservation and make sure you on their visitors list. You will need a badge and need to pass the security check at the very beginning. Once you get inside, you get some more freedom.That was my first time to attend such a luncheon. All the people presented were dressed in formal, and within several minutes, people get to know each other. Small talking is quite useful under this circumstance.I was seated with 4 ladies, all of whom were engaged in financial business. They were consultant, investment bankers and professional from financial industry. Before the real show, we served ourselves some bread and vegetables and some drinks.Soon, the hostess introduced Mr. Strauss to the audience. Mr. Strauss was majored in the automobile industry and macroeconomics. During Mr. Strauss’s presentation, he talked about the economic data of the past 12 months and made some anticipations. His main points included: first, American’s GDP expanded by almost 3% over the past year, both its labor force and productivity grew at 2% in last month. The possibility of recession had been eliminated for the next 3 quarters. America was in its 10thsuccessive growing year since 2008 financial crisis. In the past 30 years, another 2 cresses happened in 1990, the Iraq war and 2001, the 911 attack. The Midwest was on its growing, and the manufacturing has been the driving sector. At the same time, construction and service industry were struggling. In his estimation, he thought the real value of the stock market was very high. He still believed what Paul Samulson said, stock market is not the indication of economy. The Federal Open Market Committee expected GDP grow above the trend till 2020.Their basis were other indicators such as unemployment rate has fallen to 3.9%, the lowest in 30 years; the Blue chips has grown steadily. Benefit from Trump’s corporate tax reform, companies’ profit grew rapidly and many companies planned to raise wages and compensations. The productivity has been growing over the past 9 years, which helps explain why relatively strong employment growth has not transformed into high wages. A large part of weakness in productivity growth has been the weak pace of investment, although it has been increasing at a strong pace beginning at 2017. This may help explain productivity growth improvement over the past year. Improving productivity growth is helping to keep unit labor wages. Corporate profits continue improve. Inflation has moved above the Fed target of 2%. Inflation has followed the pattern of energy. Expenditures on energy remain well below historical average. The FOMC anticipate that “core inflation” will around 2% in 2020. Blue chip expect inflation remain steady over the coming year. According to its forecast, US will keep its pace at 2.9% in 2018 and 2.6% in 2019, while at the same time, China will maintain a rate of 6.4% and 6.3% respectively. As for manufacturing, the capacity utilization has been moving. Manufacturing employment increased 254,000 workers in the past 12 months. The Midwest economy index’s manufacturing component is well above its trends and the national average.According to Manufactures Purchasing Manager Index, American’s data is well above the average trend, too. When talked about the automobile industry, Mr. Strauss showed a few pictures. I was shocked that 70% of American automobiles were light trucks instead of passenger car; and the alternative vehicles including hybrid cars are still under 5% of the total market share after all these years’ development. As for the financing cost, the credit spreads between corporate high yield securities and corporate AAA securities remains very low(high yield means junk bond); the yield curve of treasury bond remains well above zero. The Fed increased the FED Fund rate by 1.75% since 2015. There will be 3 more meetings this year and the Fed Fund rate will be raised to 3% in 2019, 3.5% in 2020. By now, the Fed’s balance sheet had remained flat for several years, but the Fed began reducing it in Oct 2017.After the lecture, the audience asked many interesting questions. One of them was about how the trade war would affect American economy. Mr. Strauss responded, that the price raising in raw materials would had little effect to the end users. And in my understanding, that the adverse effect has not been transferred to the real economy.Well, to summarize, America has been growing at a strong pace and Americans still believe it will continue this trend, with little effects of outer factors. Of course, they got their solid basis to say so.It was a special experience for me to hear the top economist to talk about the economy overview and shared ideas with professional from different top companies. I learnt a lot during this luncheon.