Articles providing critical insights and analysis on monetary policy issues impacting the U.S. economy and its deep financial and economic relationship with Mexico.
Mexico Economic Update
Mexico’s economy continues to decelerate amid worsening economic outlook
The consensus forecast for 2025 real GDP growth (fourth quarter, year over year) compiled by Banco de México fell to 0.5 percent in March. The latest data available indicated a slowing economy.
April 23, 2025
Working Paper
Global Macro-Financial Cycles and Spillovers
This paper develops a new dynamic factor model to jointly characterize global macroeconomic and financial cycles and the spillovers between them.
April 22, 2025
Working Paper
Tempting FAIT: Flexible Average Inflation Targeting and the Post-COVID U.S. Inflation Surge
In August 2020, the Federal Reserve adopted Flexible Average Inflation Targeting (FAIT), permitting inflation to temporarily exceed the 2% target. Using synthetic control methods, this paper estimates that FAIT raised headline CPI inflation by 1 percentage point and core CPI by 0.5 percentage points, relative to a no-FAIT-adoption counterfactual, with short-lived effects concentrated during the 2021 inflation surge.
April 09, 2025
Working Paper
Living Up to Expectations: The Effectiveness of Forward Guidance and Inflation Dynamics Post-Global Financial Crisis
This paper studies the effectiveness of forward guidance when central banks face private agents with heterogeneous expectations allowing for a degree of bounded rationality.
April 03, 2025
Dallas Fed Economics
Texas economic outlook downbeat as uncertainty increases
The Texas economy grew slightly below trend through the first quarter of 2025. While job growth appears just off its long-term annual trend rate of about 2.1 percent, the Dallas Fed Texas Business Outlook Surveys (TBOS) point to slowing activity in both the services and manufacturing sectors.
April 03, 2025
Southwest Economy
Weighing Texas economic resilience amid tariffs, workforce challenges
Ray Perryman, principal of Waco-based The Perryman Group, has been an observer of the Texas economy for more than four decades. He offers his views of what has propelled Texas since the 1980s oil bust and the state’s future prospects, and he recounts how he grew his economics firm.
March 07, 2025
Working Paper
Trade Costs and Inflation Dynamics
Using bilateral trade flows from detailed global input-output data and a gravity framework, this paper estimates trade cost shocks and their effects on CPI inflation.
March 04, 2025
Mexico Economic Update
Mexico’s economic growth slows in 2024; outlook weakens
Mexico’s GDP grew only 0.9 percent year over year in fourth quarter 2024, after expanding 2.4 percent in 2023 and 4.6 percent in 2022. Economic growth slowed, mainly due to lower investment, slowing consumption and a contracting energy sector.
March 04, 2025
Southwest Economy
Mexico, U.S. and China offer an evolving ‘triangular’ trade relationship
Enrique Dussel Peters, a professor at the Graduate School of Economics at the Universidad Nacional Autonóma de México and coordinator of the university’s Center for Chinese–Mexican Studies, discusses trade flows between the U.S., Mexico and China and their prospects.
March 03, 2025
Dallas Fed Economics
Evidence suggests U.S. house price/rent ratio, real home prices to decline
The ratio of house prices to rents in the U.S. has risen 20 percent since first quarter 2020, coinciding with the beginning of the pandemic. The ratio is near its previous high in 2006. The future course of inflation may well be influenced by how this now-lofty ratio reverts to a more usual level.
February 25, 2025