Module 1 Extra Credit Posts for Fall 2025

September 22nd

Skipped this today. 

September 19th

Skipped this today.

September 17th

The decision on interest rates was announced before class.

What they are deciding on is a target for a rate; but it's not a rate that you or I have access to. Instead it is a rate used by banks between themselves. It's ... kind of ... the rate they all have in common. The thinking is that other rates that are less common will move in tandem with this one (and yes, they do tend to fairly strongly).

They also don't set a rate anymore, rather they set a quarter point range in which it can fluctuate. 

I showed a graph in class, but you should redo that search (since it was so close to the announcement that the data had not been updated yet). To see their upper limit on that range, you can use keywords like "FRED FOMC upper limit". It is now 4.25%/year. The lower limit is 0.25%/year lower.

The upper and lower limits were dropped by 0.25%/year. You will sometimes hear this referred to as a "quarter point" or "25 basis points". A basis point is the name of 0.01%/year. 

The FOMC does make a press release explaining their thinking. You can read it here (although I do not expect you to). They also hold a press conference which you can view here (again, not required). FWIW: the chair of the Federal Reserve, Jay Powell, starts that press conference by talking about the upward drift in the unemployment rate that I showed you in class on Monday.

September 15th 

I spoke for a few minutes about the Federal Reserve and the FOMC. This is bringing forward material from Chapters 10 and 11 because it is current this week.

The Federal Open Market Committee decides on a target for interest rates.  They meet every 6 weeks. The meeting go all day on a Tuesday, until lunch on Wednesday, and then they hold a press conference. 

This meeting will end before class on Wednesday, and will be discussed then.

I did a quick Google search to show some headlines about what was expected. Most people expect them to drop their interest rate target by 0.25%. I stated that I wasn't quite so sure of that, and stated that my odds were 60/40, favoring no change at this time.

September 12th

The first thing I did was point out that FRED is a great keyword to use for internet searches for macroeconomic data. This is because it is the name of a free database (beware: most macroeconomic data for most countries is free, but there are internet sites that will try and sell it to you).

The second thing I did was search with the keywords "FRED real GDP recessions" and "FRED real GDP per capita recessions". This is drawing a little from Chapter 7.

There will be no extra credit questions on those two things. Any question from this day will be based on the two graphs I showed in class (that you can recreate with those keywords).

The first graph showed the last 75 years of U.S. real GDP. Growth was obvious by the upward slope and curvature. In any person's lifetime, there will be 10-15 recessions, which were shaded on that graph. I am not being dismissive of recessions, which are major events in peoples' lives. But the big picture is that the dominant macroeconomic feature is that growth will make the economy quickly recover from recessions.

The second graph showed the percentage changes in real GDP per capita, which is how we approximate personal well-being. Positive growth is good,and recessions are periods when it dips below zero. But, in order to feel good about the economy, those growth rates need to exceed population growth (we need more stuff for more people). That threshold is about 1.5% per year. We have been beating that for a few years in a row ... but not by as much as in some earlier periods. 

 August 27th to September 10th

In class, I lectured a bit each class day on the history of macroeconomics and policy, in support of the first part of Chapter 6.

Expect 2-3 short-answer extra credit questions based on these mini-lectures.