Connect with us

Spread & Containment

FDA Says Ivermectin Doesn’t Work Against COVID-19 But Points To Studies That Show It Does

FDA Says Ivermectin Doesn’t Work Against COVID-19 But Points To Studies That Show It Does

Authored by Zachary Stieber via The Epoch Times…

Published

on

FDA Says Ivermectin Doesn't Work Against COVID-19 But Points To Studies That Show It Does

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The U.S. Food and Drug Administration (FDA) says a drug called ivermectin does not work against COVID-19 but links to studies that show it does, an Epoch Times review has found.

Ivermectin tablets packaged for human use.

The FDA’s website states, “Currently available data do not show ivermectin is effective against COVID-19.”

But half of the studies to which the FDA points support using ivermectin against COVID-19, according to the review.

The papers cut against the drug agency’s repeated exhortations for people not to take ivermectin for COVID-19. In Twitter posts, public statements, and emails, FDA officials have repeatedly warned against ivermectin. Some of those statements triggered a lawsuit from doctors who say the agency’s role is to approve drugs, not to issue recommendations. The suit was dismissed this week.

Dr. Pierre Kory, who frequently prescribes ivermectin for COVID-19 and co-authored a meta-analysis that concluded the drug is effective against the illness, told The Epoch Times that the government’s position on ivermectin “is one of the most glaring examples of the corruption of modern evidence based medicine.”

There’s one message they want everyone to understand. And that message is that ivermectin doesn’t work,” Kory said. “That’s not a scientific conclusion, that’s theirs. That’s their perverted and distorted interpretation of the data.”

The FDA’s media office did not respond to a request for comment.

Dr. Janet Woodcock, a top official at the agency who was its commissioner from January 2021 to February 2022, told The Epoch Times via email that “ivermectin has been shown to be ineffective against COVID in large randomized trials.”

A sign for the Food And Drug Administration outside its headquarters in White Oak, Md., on July 20, 2020. (Sarah Silbiger/Getty Images)

Studies

The FDA’s website points to a U.S. National Library of Medicine database of studies analyzing ivermectin against COVID-19. There are 88 studies listed in the database.

Out of studies that are listed, have been completed, and have results reported, most show or indicate ivermectin effectively combats or prevents COVID-19, according to the review by The Epoch Times.

They include papers reporting on results from randomized, controlled trials, which are often offered as the highest level of evidence by U.S. government officials. Such trials feature a group that receives a placebo and a group that receives the drug, randomization into groups, and blinding, or shielding operators and/or patients from the knowledge of which participants are receiving ivermectin.

Among the papers is a randomized, blinded, controlled trial that found people who received ivermectin and doxycycline, an antibiotic, recovered faster from COVID-19 than those who received a placebo.

Bangladeshi researchers reported the results from the trial of 363 participants on May 13, 2021, in the Journal of International Medical Research.

“Patients with mild-to-moderate COVID-19 infection treated with ivermectin plus doxycycline recovered earlier, were less likely to progress to more serious disease, and were more likely to be COVID-19 negative by RT-PCR on day 14,” they said. PCR has been used to test for COVID-19.

Another paper, published on July 7, 2022, in the International Journal of Infectious Diseases, found that that ivermectin decreased the level of COVID-19 and its viability. Israeli researchers in the randomized, controlled, open label trial compared 47 patients who received ivermectin against 42 who received placebos and said that “ivermectin significantly reduced the time of viral shedding and affected viral viability when initiated in the first week after evidence of infection.”

There were lower viral loads and less viable cultures in the ivermectin group, which shows its anti-SARS-CoV-2 activity,” the researchers said. SARS-CoV-2 is a name for the virus that causes COVID-19.

A third paper concluded that a regimen of ivermectin and carrageenan works as a prophylaxis, or preventative medicine. Argentinian researchers found in the observational trial involving 229 health care workers that ivermectin helped prevent COVID-19 infection. A followup study involving nearly 1,200 workers confirmed the results. Both sets were reported in the Journal of Clinical and Biomedical Investigation on Nov. 17, 2020.

Ivermectin “could have saved so many lives,” Héctor Carvallo, one of the researchers, told The Epoch Times via email, adding that “it’s been a crime against mankind to prevent its prescription.”

Some other studies, including the largest ones, either found indications that ivermectin works against COVID-19 but did not achieve statistical significance or found no evidence that ivermectin is effective.

That includes a randomized, controlled, double-blind 2021 study by Mexican researchers that found ivermectin did not significantly impact hospitalization duration or mortality, and a randomized, controlled, double-blind 2022 trial by U.S. researchers that concluded ivermectin did not prevent hypoxemia, hospitalization, or death.

FDA Intervention

Scientists in Australia in April 2020 found that ivermectin worked well against the COVID-19 virus in cell culture, prompting doctors in multiple countries, including Peru and the United States, to start using it against the new illness.

Ivermectin is approved by the FDA to treat parasites. One version is used on horses and other animals.

The FDA quickly warned against using the animal form and said that people should “not take any form of ivermectin unless it has been prescribed to them by a licensed health care provider and is obtained through a legitimate source.”

Studies later in the year suggested ivermectin worked well in humans who had COVID-19, including halting the progression of disease (pdf), helping patients improve faster, and preventing COVID-19 infection, though other studies returned results that did not support ivermectin as a treatment.

The FDA maintained its stance against COVID-19, and created a new web page on March 5, 2021. It initially said, “The FDA has not reviewed data to support use of ivermectin in COVID-19 patients to treat or to prevent COVID-19; however, some initial research is underway.

In August 2021, the FDA urged people against using ivermectin by telling them that “you are not a horse.” It linked to the page, which was updated the following month with the language it now contains about data not showing ivermectin is effective.

American doctors are allowed to prescribe drugs approved for one use for a different use, a practice known as off-label. But doctors who prescribed ivermectin soon found that many pharmacies stopped filling prescriptions, citing advice from the FDA and other U.S. government bodies.

Studies on Ivermectin Against COVID-19 Date Journal Participants Outcome
         
Effects of Ivermectin-azithromycin-cholecalciferol combined therapy on COVID-19 infected patients: A proof of concept study 2020 Biomedical Research 35 Positive
Effectiveness of Ivermectin as add-on Therapy in COVID-19 Management July 8, 2020 Preprint 87 Positive
Safety and Efficacy of the Combined Use of Ivermectin, Dexamethasone, Enoxaparin and Aspirin Against COVID-19 Sept. 15, 2020 Preprint 167 Positive
Study of the Efficacy and Safety of Topical Ivermectin + Iota-Carrageenan in the Prophylaxis against COVID-19 in Health Personnel Nov. 17, 2020 Journal of Biomedical Research and Clinical Investigation 229 Positive
Use of Ivermectin as a Potential Chemoprophylaxis for COVID-19 in Egypt: A Randomised Clinical Trial Feb. 1, 2021 Journal of Clinical and Diagnostic Research 203 contacts to 52 index cases Positive
Efficacy of Ivermectin in COVID-19 Patients with Mild to Moderate Disease Feb. 5, 2021 Preprint 86 Positive
A Comparative Study on Ivermectin-Doxycycline and Hydroxychloroquine-Azithromycin Therapy on COVID-19 Patients Feb. 25, 2021 Eurasian Journal of Medicine and Oncology 116 Positive
Ivermectin in combination with doxycycline for treating COVID-19 symptoms: a randomized trial May 2021 International Journal of International Medical Research 363 Positive
Effect of a combination of nitazoxanide, ribavirin, and ivermectin plus zinc supplement (MANS.NRIZ study) on the clearance of mild COVID‐19 May 2021 Journal of Medical Virology 113 Positive
Controlled Randomized Clinical Trial on Using Ivermectin with Doxycycline for Treating COVID-19 Patients in Baghdad, Iraq May 6, 2021 Iraqi Journal of Medical Sciences 140 Positive
Clinical, Biochemical and Molecular Evaluations of Ivermectin Mucoadhesive Nanosuspension Nasal Spray in Reducing Upper Respiratory Symptoms of Mild COVID-19 June 15, 2021 International Journal of Nanomedicine 114 Positive
Ivermectin as a SARS-CoV-2 Pre-Exposure Prophylaxis Method in Healthcare Workers: A Propensity Score-Matched Retrospective Cohort Study Aug. 13, 2021 Cureus 271 Positive
Intensive Treatment With Ivermectin and Iota-Carrageenan as Pre-exposure Prophylaxis for COVID-19 in Health Care Workers From Tucuman, Argentina Sept-Oct, 2021 American Journal of Therapeutics 234 Positive
Effectiveness of ivermectin-based multidrug therapy in severely hypoxic, ambulatory COVID-19 patients Feb. 9, 2022 Future Microbiology 24 Positive
Randomized trials – Ivermectin repurposing for COVID-19 treatment of outpatients with mild disease in primary health care centers June 21, 2022 Research, Society and Development 254 Positive
The effect of ivermectin on the viral load and culture viability in early treatment of nonhospitalized patients with mild COVID-19 – a double-blind, randomized placebo-controlled trial July 7, 2022 International Journal of Infectious Diseases 89 Positive
The effect of early treatment with ivermectin on viral load, symptoms and humoral response in patients with non-severe COVID-19: A pilot, double-blind, placebo-controlled, randomized clinical trial Feb. 1, 2021 The Lancet 24 Mixed
Positive impact of oral hydroxychloroquine and povidone-iodine throat spray for COVID-19 prophylaxis: An open-label randomized trial April 2021 International Journal of Infectious Diseases 3037 Mixed
Clinical study evaluating the efficacy of ivermectin in COVID-19 treatment: A randomized controlled study June 2, 2021 Journal of Medical Virology 164 Mixed
Antiviral effect of high-dose ivermectin in adults with COVID-19: A proof-of-concept randomized trial July 1, 2021 The Lancet 45 Mixed
Ivermectin compared with placebo in the clinical evolution of Mexican patients with asymptomatic and mild COVID-19: a randomized clinical trial May 23, 2022 Preprint 66 Mixed
Efficacy and safety of ivermectin in the treatment of mild to moderate COVID-19 infection: a randomized, double-blind, placebo-controlled trial Aug. 26, 2022 Trials 72 Mixed
Efficacy and Safety of Ivermectin and Hydroxychloroquine in Patients with Severe COVID-19: A Randomized Controlled Trial Feb. 23, 2021 Infectious Disease Reports 106 Not Supportive
Effect of Ivermectin on Time to Resolution of Symptoms Among Adults With Mild COVID-19 March 4, 2021 Journal of American Medical Association 476 Not Supportive
Evaluation of the effectiveness and safety of adding ivermectin to treatment in severe COVID-19 patients May 4, 2021 BMC Infectious Diseases 66 Not Supportive
Ivermectin to prevent hospitalizations in patients with COVID-19 (IVERCOR-COVID19) a randomized, double-blind, placebo-controlled trial July 2, 2021 BMC Infectious Diseases 501 Not Supportive
Efficacy of Ivermectin Treatment on Disease Progression Among Adults With Mild to Moderate COVID-19 and Comorbidities Feb. 18, 2022 Journal of American Medical Association 490 Not Supportive
Effect of combined use of ivermectin and colchicine in COVID-19 patients June 22, 2022 Egyptian Journal of Anesthesia 135 Not Supportive
Pharmacometric assessment of the in vivo antiviral activity of ivermectin in early symptomatic COVID-19 July 19, 2022 Preprint 96 Not Supportive
Randomized Trial of Metformin, Ivermectin, and Fluvoxamine for Covid-19 Aug. 18, 2022 New England Journal of Medicine 1323 Not Supportive
Ivermectin role in COVID-19 treatment (IRICT): single-center, adaptive, randomized, double-blind, placebo-controlled, clinical trial Oct 20, 2022 Expert Review of Anti-infective Therapy unclear Not Supportive
Effect of Ivermectin vs Placebo on Time to Sustained Recovery in Outpatients With Mild to Moderate COVID-19 Oct. 25, 2022 Journal of American Medical Association 1591 Not Supportive
Note: Only studies from the database linked to by the FDA that have been completed and have had results released are included

Half of Studies Supportive

The FDA does not cite studies on its website to support its statement that data “do not show ivermectin is effective against COVID-19.”

Clinical trials assessing ivermectin tablets for the prevention or treatment of COVID-19 in people are ongoing,” the agency adds, providing a link to the U.S. National Library of Medicine’s database.

Of the 88 studies listed there, 56 fall under one of three categories: have not been completed, were completed but results have not been reported, or were completed and have since been retracted or otherwise withdrawn.

Of the remaining 32, 16 found or indicate ivermectin is effective as a COVID-19 treatment or prophylactic, according to the Epoch Times review.

Two of the trials were randomized, controlled, and blinded. Nine others were randomized and controlled but were not blinded at all. Most of the rest were observational, meaning they analyzed data from real-world settings like hospitals, or used observational data to create what’s known as a synthetic control group.

The set of papers includes results of a randomized, controlled, open label observational trial (pdf) that found ivermectin combined with doxycycline, an antibiotic, reduced the time to recovery and the mortality rate, and a randomized, controlled, double-blinded trial that found ivermectin and doxycycline quickened recovery and patients were less likely to see their disease progress.

Of the 16 other studies, six reported mixed results. For instance, Spanish researchers reported in The Lancet in February 2021 that ivermectin did not have an impact on testing results, but that there was “a marked reduction” of self-reported symptoms such as loss of smell and cough, and lower levels of viral loads. The result “warrants assessment in larger trials,” the researchers said.

The remaining 10 studies returned results that did not favor ivermectin or did not achieve statistical significance.

U.S. researchers, for example, found that ivermectin probably worked better than a placebo, but that the results did not achieve statistical significance, prompting them to say in October that “this study adds to the growing evidence that there is not a clinically relevant treatment effect of ivermectin at this dose and duration.”

The FDA did not respond to a request for comment on the revelation that half of the studies it points to support using ivermectin (IVM) against COVID-19.

Woodcock, the FDA’s principal deputy commissioner, reviewed the studies. She was unimpressed.

The Bangladeshi trial, for instance, was criticized for primarily including young persons, and having a higher number of dropouts in the placebo arm. Woodcock said the Israeli study did not report “clinical outcomes” and noted many of the other papers had small numbers of participants.

There are only a couple studies here that really look at the effects of IVM and see a positive clinical effect and they are much smaller than the negative studies,” Woodcock told The Epoch Times in an email.

The trials in favor of ivermectin are on the smaller side, and more likely to be observational. But that doesn’t necessarily mean they are inferior, Kory said. He cited research that found there was little difference between observational studies and randomized-controlled trials, as well as a paper that said “study design is only one factor that determines study quality.”

The FDA isn’t the only government group opposed to using ivermectin to treat COVID-19. The National Institutes of Health (NIH) COVID-19 Treatment Guidelines Panel recommends against it, citing several of the larger trials that found little or no benefit for ivermectin. The panel cites none of the papers that found a positive effect.

Read more here...

Tyler Durden Fri, 12/09/2022 - 22:20

Read More

Continue Reading

Government

Students lose out as cities and states give billions in property tax breaks to businesses − draining school budgets and especially hurting the poorest students

An estimated 95% of US cities provide economic development tax incentives to woo corporate investors, taking billions away from schools.

Published

on

By

Exxon Mobil Corp.'s campus in East Baton Rouge Parish, left, received millions in tax abatements to the detriment of local schools, right. Barry Lewis/Getty Images, Tjean314/Wikimedia

Built in 1910, James Elementary is a three-story brick school in Kansas City, Missouri’s historic Northeast neighborhood, with a bright blue front door framed by a sand-colored stone arch adorned with a gargoyle. As bustling students and teachers negotiate a maze of gray stairs with worn wooden handrails, Marjorie Mayes, the school’s principal, escorts a visitor across uneven blue tile floors on the ground floor to a classroom with exposed brick walls and pipes. Bubbling paint mars some walls, evidence of the water leaks spreading inside the aging building.

“It’s living history,” said Mayes during a mid-September tour of the building. “Not the kind of living history we want.”

The district would like to tackle the US$400 million in deferred maintenance needed to create a 21st century learning environment at its 35 schools – including James Elementary – but it can’t. It doesn’t have the money.

Property tax redirect

The lack of funds is a direct result of the property tax breaks that Kansas City lavishes on companies and developers that do business there. The program is supposed to bring in new jobs and business but instead has ended up draining civic coffers and starving schools. Between 2017 and 2023, the Kansas City school district lost $237.3 million through tax abatements.

Kansas City is hardly an anomaly. An estimated 95% of U.S. cities provide economic development tax incentives to woo corporate investors. The upshot is that billions have been diverted from large urban school districts and from a growing number of small suburban and rural districts. The impact is seen in districts as diverse as Chicago and Cleveland, Hillsboro, Oregon, and Storey County, Nevada.

The result? A 2021 review of 2,498 financial statements from school districts across 27 states revealed that, in 2019 alone, at least $2.4 billion was diverted to fund tax incentives. Yet that substantial figure still downplays the magnitude of the problem, because three-quarters of the 10,370 districts analyzed did not provide any information on tax abatement agreements.

Tax abatement programs have long been controversial, pitting states and communities against one another in beggar-thy-neighbor contests. Their economic value is also, at best, unclear: Studies show most companies would have made the same location decision without taxpayer subsidies. Meanwhile, schools make up the largest cost item in these communities, meaning they suffer most when companies are granted breaks in property taxes.

A three-month investigation by The Conversation and three scholars with expertise in economic development, tax laws and education policy shows that the cash drain from these programs is not equally shared by schools in the same communities. At the local level, tax abatements and exemptions often come at the cost of critical funding for school districts that disproportionately serve students from low-income households and who are racial minorities.

In Missouri, for example, in 2022 nearly $1,700 per student was redirected from Kansas City public and charter schools, while between $500 and $900 was redirected from wealthier, whiter Northland schools on the north side of the river in Kansas City and in the suburbs beyond. Other studies have found similar demographic trends elsewhere, including New York state, South Carolina and Columbus, Ohio.

The funding gaps produced by abated money often force schools to delay needed maintenance, increase class sizes, lay off teachers and support staff and even close outright. Schools also struggle to update or replace outdated technology, books and other educational resources. And, amid a nationwide teacher shortage, schools under financial pressures sometimes turn to inexperienced teachers who are not fully certified or rely too heavily on recruits from overseas who have been given special visa status.

Lost funding also prevents teachers and staff, who often feed, clothe and otherwise go above and beyond to help students in need, from earning a living wage. All told, tax abatements can end up harming a community’s value, with constant funding shortfalls creating a cycle of decline.

Incentives, payoffs and guarantees

Perversely, some of the largest beneficiaries of tax abatements are the politicians who publicly boast of handing out the breaks despite the harm to poorer communities. Incumbent governors have used the incentives as a means of taking credit for job creation, even when the jobs were coming anyway.

“We know that subsidies don’t work,” said Elizabeth Marcello, a doctoral lecturer at Hunter College who studies governmental planning and policy and the interactions between state and local governments. “But they are good political stories, and I think that’s why politicians love them so much.”

Academic research shows that economic development incentives are ineffective most of the time – and harm school systems.

While some voters may celebrate abatements, parents can recognize the disparities between school districts that are created by the tax breaks. Fairleigh Jackson pointed out that her daughter’s East Baton Rouge third grade class lacks access to playground equipment.

The class is attending school in a temporary building while their elementary school undergoes a two-year renovation.

The temporary site has some grass and a cement slab where kids can play, but no playground equipment, Jackson said. And parents needed to set up an Amazon wish list to purchase basic equipment such as balls, jump ropes and chalk for students to use. The district told parents there would be no playground equipment due to a lack of funds, then promised to install equipment, Jackson said, but months later, there is none.

Cement surface surrounded by a fence with grass beyond. There's no playground equipment..
The temporary site where Fairleigh Jackson’s daughter goes to school in East Baton Rouge Parish lacks playground equipment. Fairleigh Jackson, CC BY-ND

Jackson said it’s hard to complain when other schools in the district don’t even have needed security measures in place. “When I think about playground equipment, I think that’s a necessary piece of child development,” Jackson said. “Do we even advocate for something that should be a daily part of our kids’ experience when kids’ safety isn’t being funded?”

Meanwhile, the challenges facing administrators 500-odd miles away at Atlanta Public Schools are nothing if not formidable: The district is dealing with chronic absenteeism among half of its Black students, many students are experiencing homelessness, and it’s facing a teacher shortage.

At the same time, Atlanta is showering corporations with tax breaks. The city has two bodies that dole them out: the Development Authority of Fulton County, or DAFC, and Invest Atlanta, the city’s economic development agency. The deals handed out by the two agencies have drained $103.8 million from schools from fiscal 2017 to 2022, according to Atlanta school system financial statements.

What exactly Atlanta and other cities and states are accomplishing with tax abatement programs is hard to discern. Fewer than a quarter of companies that receive breaks in the U.S. needed an incentive to invest, according to a 2018 study by the Upjohn Institute for Employment Research, a nonprofit research organization.

This means that at least 75% of companies received tax abatements when they’re not needed – with communities paying a heavy price for economic development that sometimes provides little benefit.

In Kansas City, for example, there’s no guarantee that the businesses that do set up shop after receiving a tax abatement will remain there long term. That’s significant considering the historic border war between the Missouri and Kansas sides of Kansas City – a competition to be the most generous to the businesses, said Jason Roberts, president of the Kansas City Federation of Teachers and School-Related Personnel. Kansas City, Missouri, has a 1% income tax on people who work in the city, so it competes for as many workers as possible to secure that earnings tax, Roberts said.

Under city and state tax abatement programs, companies that used to be in Kansas City have since relocated. The AMC Theaters headquarters, for example, moved from the city’s downtown to Leawood, Kansas, about a decade ago, garnering some $40 million in Promoting Employment Across Kansas tax incentives.

Roberts said that when one side’s financial largesse runs out, companies often move across the state line – until both states decided in 2019 that enough was enough and declared a cease-fire.

But tax breaks for other businesses continue. “Our mission is to grow the economy of Kansas City, and application of tools such as tax exemptions are vital to achieving that mission, said Jon Stephens, president and CEO of Port KC, the Kansas City Port Authority. The incentives speed development, and providing them "has resulted in growth choosing KC versus other markets,” he added.

In Atlanta, those tax breaks are not going to projects in neighborhoods that need help attracting development. They have largely been handed out to projects that are in high demand areas of the city, said Julian Bene, who served on Invest Atlanta’s board from 2010 to 2018. In 2019, for instance, the Fulton County development authority approved a 10-year, $16 million tax abatement for a 410-foot-tall, 27,000-square-foot tower in Atlanta’s vibrant Midtown business district. The project included hotel space, retail space and office space that is now occupied by Google and Invesco.

In 2021, a developer in Atlanta pulled its request for an $8 million tax break to expand its new massive, mixed-use Ponce City Market development in the trendy Beltline neighborhood with an office tower and apartment building. Because of community pushback, the developer knew it likely did not have enough votes from the commission for approval, Bene said. After a second try for $5 million in lower taxes was also rejected, the developer went ahead and built the project anyway.

Invest Atlanta has also turned down projects in the past, Bene said. Oftentimes, after getting rejected, the developer goes back to the landowner and asks for a better price to buy the property to make their numbers work, because it was overvalued at the start.

Trouble in Philadelphia

On Thursday, Oct. 26, 2023, an environmental team was preparing Southwark School in Philadelphia for the winter cold. While checking an attic fan, members of the team saw loose dust on top of flooring that contained asbestos. The dust that certainly was blowing into the floors below could contain the cancer-causing agent. Within a day, Southwark was closed – the seventh Philadelphia school temporarily shuttered since the previous academic year because of possible asbestos contamination.

A 2019 inspection of the John L Kinsey school in Philadelphia found asbestos in plaster walls, floor tiles, radiator insulation and electrical panels. Asbestos is a major problem for Philadelphia’s public schools. The district needs $430 million to clean up the asbestos, lead, and other environmental hazards that place the health of students, teachers and staff at risk. And that is on top of an additional $2.4 billion to fix failing and damaged buildings.

Yet the money is not available. Matthew Stem, a former district official, testified in a 2023 lawsuit about financing of Pennsylvania schools that the environmental health risks cannot be addressed until an emergency like at Southwark because “existing funding sources are not sufficient to remediate those types of issues.”

Meanwhile, the city keeps doling out abatements, draining money that could have gone toward making Philadelphia schools safer. In the fiscal year ending June 2022, such tax breaks cost the school district $118 million – more than 25% of the total amount needed to remove the asbestos and other health dangers. These abatements take 31 years to break even, according to the city’s own scenario impact analyses.

Huge subsets of the community – primarily Black, Brown, poor or a combination – are being “drastically impacted” by the exemptions and funding shortfalls for the school district, said Kendra Brooks, a Philadelphia City Council member. Schools and students are affected by mold, asbestos and lead, and crumbling infrastructure, as well as teacher and staffing shortages – including support staff, social workers and psychologists.

More than half the district’s schools that lacked adequate air conditioning – 87 schools – had to go to half days during the first week of the 2023 school year because of extreme heat. Poor heating systems also leave the schools cold in the winter. And some schools are overcrowded, resulting in large class sizes, she said.

Front of a four-story brick school building with tall windows, some with air-conditioners
Horace Furness High School in Philadelphia, where hot summers have temporarily closed schools that lack air conditioning. Nick-philly/Wikimedia, CC BY-SA

Teachers and researchers agree that a lack of adequate funding undermines educational opportunities and outcomes. That’s especially true for children living in poverty. A 2016 study found that a 10% increase in per-pupil spending each year for all 12 years of public schooling results in nearly one-third of a year of more education, 7.7% higher wages and a 3.2% reduction in annual incidence of adult poverty. The study estimated that a 21.7% increase could eliminate the high school graduation gap faced by children from low-income families.

More money for schools leads to more education resources for students and their teachers. The same researchers found that spending increases were associated with reductions in student-to-teacher ratios, increases in teacher salaries and longer school years. Other studies yielded similar results: School funding matters, especially for children already suffering the harms of poverty.

While tax abatements themselves are generally linked to rising property values, the benefits are not evenly distributed. In fact, any expansion of the tax base due to new property construction tends to be outside of the county granting the tax abatement. For families in school districts with the lost tax revenues, their neighbors’ good fortune likely comes as little solace. Meanwhile, a poorly funded education system is less likely to yield a skilled and competitive workforce, creating longer-term economic costs that make the region less attractive for businesses and residents.

“There’s a head-on collision here between private gain and the future quality of America’s workforce,” said Greg LeRoy, executive director at Good Jobs First, a Washington, D.C., advocacy group that’s critical of tax abatement and tracks the use of economic development subsidies.

Three-story school building with police officers out front and traffic lights in the foreground
Roxborough High School in Philadelphia. AP Photo/Matt Rourke

As funding dwindles and educational quality declines, additional families with means often opt for alternative educational avenues such as private schooling, home-schooling or moving to a different school district, further weakening the public school system.

Throughout the U.S., parents with the power to do so demand special arrangements, such as selective schools or high-track enclaves that hire experienced, fully prepared teachers. If demands aren’t met, they leave the district’s public schools for private schools or for the suburbs. Some parents even organize to splinter their more advantaged, and generally whiter, neighborhoods away from the larger urban school districts.

Those parental demands – known among scholars as “opportunity hoarding” – may seem unreasonable from the outside, but scarcity breeds very real fears about educational harms inflicted on one’s own children. Regardless of who’s to blame, the children who bear the heaviest burden of the nation’s concentrated poverty and racialized poverty again lose out.

Rethinking in Philadelphia and Riverhead

Americans also ask public schools to accomplish Herculean tasks that go far beyond the education basics, as many parents discovered at the onset of the pandemic when schools closed and their support for families largely disappeared.

A school serving students who endure housing and food insecurity must dedicate resources toward children’s basic needs and trauma. But districts serving more low-income students spend less per student on average, and almost half the states have regressive funding structures.

Facing dwindling resources for schools, several cities have begun to rethink their tax exemption programs.

The Philadelphia City Council recently passed a scale-back on a 10-year property tax abatement by decreasing the percentage of the subsidy over that time. But even with that change, millions will be lost to tax exemptions that could instead be invested in cash-depleted schools. “We could make major changes in our schools’ infrastructure, curriculum, staffing, staffing ratios, support staff, social workers, school psychologists – take your pick,” Brooks said.

Other cities looking to reform tax abatement programs are taking a different approach. In Riverhead, New York, on Long Island, developers or project owners can be granted exemptions on their property tax and allowed instead to shell out a far smaller “payment in lieu of taxes,” or PILOT. When the abatement ends, most commonly after 10 years, the businesses then will pay full property taxes.

At least, that’s the idea, but the system is far from perfect. Beneficiaries of the PILOT program have failed to pay on time, leaving the school board struggling to fill a budget hole. Also, the payments are not equal to the amount they would receive for property taxes, with millions of dollars in potential revenue over a decade being cut to as little as a few hundred thousand. On the back end, if a business that’s subsidized with tax breaks fails after 10 years, the projected benefits never emerge.

And when the time came to start paying taxes, developers have returned to the city’s Industrial Development Agency with hat in hand, asking for more tax breaks. A local for-profit aquarium, for example, was granted a 10-year PILOT program break by Riverhead in 1999; it has received so many extensions that it is not scheduled to start paying full taxes until 2031 – 22 years after originally planned.

Kansas City border politics

Like many cities, Kansas City has a long history of segregation, white flight and racial redlining, said Kathleen Pointer, senior policy strategist for Kansas City Public Schools.

James Elementary in Kansas City, Mo. Danielle McLean, CC BY-ND

Troost Avenue, where the Kansas City Public Schools administrative office is located, serves as the city’s historic racial dividing line, with wealthier white families living in the west and more economically disadvantaged people of color in the east. Most of the district’s schools are located east of Troost, not west.

Students on the west side “pretty much automatically funnel into the college preparatory middle school and high schools,” said The Federation of Teachers’ Roberts. Those schools are considered signature schools that are selective and are better taken care of than the typical neighborhood schools, he added.

The school district’s tax levy was set by voters in 1969 at 3.75%. But successive attempts over the next few decades to increase the levy at the ballot box failed. During a decadeslong desegregation lawsuit that was eventually resolved through a settlement agreement in the 1990s, a court raised the district’s levy rate to 4.96% without voter approval. The levy has remained at the same 4.96% rate since.

Meanwhile, Kansas City is still distributing 20-year tax abatements to companies and developers for projects. The district calculated that about 92% of the money that was abated within the school district’s boundaries was for projects within the whiter west side of the city, Pointer said.

“Unfortunately, we can’t pick or choose where developers build,” said Meredith Hoenes, director of communications for Port KC. “We aren’t planning and zoning. Developers typically have plans in place when they knock on our door.”

In Kansas City, several agencies administer tax incentives, allowing developers to shop around to different bodies to receive one. Pointer said he believes the Port Authority is popular because they don’t do a third-party financial analysis to prove that the developers need the amount that they say they do.

With 20-year abatements, a child will start pre-K and graduate high school before seeing the benefits of a property being fully on the tax rolls, Pointer said. Developers, meanwhile, routinely threaten to build somewhere else if they don’t get the incentive, she said.

In 2020, BlueScope Construction, a company that had received tax incentives for nearly 20 years and was about to roll off its abatement, asked for another 13 years and threatened to move to another state if it didn’t get it. At the time, the U.S. was grappling with a racial reckoning following the murder of George Floyd, who was killed by a Minneapolis police officer.

“That was a moment for Kansas City Public Schools where we really drew a line in the sand and talked about incentives as an equity issue,” Pointer said.

After the district raised the issue – tying the incentives to systemic racism – the City Council rejected BlueScope’s bid and, three years later, it’s still in Kansas City, fully on the tax rolls, she said. BlueScope did not return multiple requests for comment.

Recently, a multifamily housing project was approved for a 20-year tax abatement by the Port Authority of Kansas City at Country Club Plaza, an outdoor shopping center in an affluent part of the city. The housing project included no affordable units. “This project was approved without any independent financial analysis proving that it needed that subsidy,” Pointer said.

All told, the Kansas City Public Schools district faces several shortfalls beyond the $400 million in deferred maintenance, Superintendent Jennifer Collier said. There are staffing shortages at all positions: teachers, paraprofessionals and support staff. As in much of the U.S., the cost of housing is surging. New developments that are being built do not include affordable housing, or when they do, the units are still out of reach for teachers.

That’s making it harder for a district that already loses about 1 in 5 of its teachers each year to keep or recruit new ones, who earn an average of only $46,150 their first year on the job, Collier said.

East Baton Rouge and the industrial corridor

It’s impossible to miss the tanks, towers, pipes and industrial structures that incongruously line Baton Rouge’s Scenic Highway landscape. They’re part of Exxon Mobil Corp.’s campus, home of the oil giant’s refinery in addition to chemical and plastics plants.

Aerial view of industrial buildings along a river
Exxon Mobil Corp.’s Baton Rouge campus occupies 3.28 square miles. AP Photo/Gerald Herbert

Sitting along the Mississippi River, the campus has been a staple of Louisiana’s capital for over 100 years. It’s where 6,000 employees and contractors who collectively earn over $400 million annually produce 522,000 barrels of crude oil per day when at full capacity, as well as the annual production and manufacture of 3 billion pounds of high-density polyethylene and polypropylene and 6.6 billion pounds of petrochemical products. The company posted a record-breaking $55.7 billion in profits in 2022 and $36 billion in 2023.

Across the street are empty fields and roads leading into neighborhoods that have been designated by the U.S. Department of Agriculture as a low-income food desert. A mile drive down the street to Route 67 is a Dollar General, fast-food restaurants, and tiny, rundown food stores. A Hi Nabor Supermarket is 4 miles away.

East Baton Rouge Parish’s McKinley High School, a 12-minute drive from the refinery, serves a student body that is about 80% Black and 85% poor. The school, which boasts famous alums such as rapper Kevin Gates, former NBA player Tyrus Thomas and Presidential Medal of Freedom recipient Gardner C. Taylor, holds a special place in the community, but it has been beset by violence and tragedy lately. Its football team quarterback, who was killed days before graduation in 2017, was among at least four of McKinley’s students who have been shot or murdered over the past six years.

The experience is starkly different at some of the district’s more advantaged schools, including its magnet programs open to high-performing students.

Black-and-white outline of Louisiana showing the parishes, with one, near the bottom right, filled in red
East Baton Rouge Parish, marked in red, includes an Exxon Mobil Corp. campus and the city of Baton Rouge. David Benbennick/Wikimedia

Baton Rouge is a tale of two cities, with some of the worst outcomes in the state for education, income and mortality, and some of the best outcomes. “It was only separated by sometimes a few blocks,” said Edgar Cage, the lead organizer for the advocacy group Together Baton Rouge. Cage, who grew up in the city when it was segregated by Jim Crow laws, said the root cause of that disparity was racism.

“Underserved kids don’t have a path forward” in East Baton Rouge public schools, Cage said.

A 2019 report from the Urban League of Louisiana found that economically disadvantaged African American and Hispanic students are not provided equitable access to high-quality education opportunities. That has contributed to those students underperforming on standardized state assessments, such as the LEAP exam, being unprepared to advance to higher grades and being excluded from high-quality curricula and instruction, as well as the highest-performing schools and magnet schools.

“Baton Rouge is home to some of the highest performing schools in the state,” according to the report. “Yet the highest performing schools and schools that have selective admissions policies often exclude disadvantaged students and African American and Hispanic students.”

Dawn Collins, who served on the district’s school board from 2016 to 2022, said that with more funding, the district could provide more targeted interventions for students who were struggling academically or additional support to staff so they can better assist students with greater needs.

But for decades, Louisiana’s Industrial Ad Valorem Tax Exemption Program, or ITEP, allowed for 100% property tax exemptions for industrial manufacturing facilities, said Erin Hansen, the statewide policy analyst at Together Louisiana, a network of 250 religious and civic organizations across the state that advocates for grassroots issues, including tax fairness.

The ITEP program was created in the 1930s through a state constitutional amendment, allowing companies to bypass a public vote and get approval for the exemption through the governor-appointed Board of Commerce and Industry, Hansen said. For over 80 years, that board approved nearly all applications that it received, she said.

Since 2000, Louisiana has granted a total of $35 billion in corporate property tax breaks for 12,590 projects.

Louisiana’s executive order

A few efforts to reform the program over the years have largely failed. But in 2016, Gov. John Bel Edwards signed an executive order that slightly but importantly tweaked the system. On top of the state board vote, the order gave local taxing bodies – such as school boards, sheriffs and parish or city councils – the ability to vote on their own individual portions of the tax exemptions. And in 2019 the East Baton Rouge Parish School Board exercised its power to vote down an abatement.

Throughout the U.S., school boards’ power over the tax abatements that affect their budgets vary, and in some states, including Georgia, Kansas, Nevada, New Jersey and South Carolina, school boards lack any formal ability to vote or comment on tax abatement deals that affect them.

Edwards’ executive order also capped the maximum exemption at 80% and tightened the rules so routine capital investments and maintenance were no longer eligible, Hansen said. A requirement concerning job creation was also put in place.

Concerned residents and activists, led by Together Louisiana and sister group Together Baton Rouge, rallied around the new rules and pushed back against the billion-dollar corporation taking more tax money from the schools. In 2019, the campaign worked: the school board rejected a $2.9 million property tax break bid by Exxon Mobil.

After the decision, Exxon Mobil reportedly described the city as “unpredictable.”

However, members of the business community have continued to lobby for the tax breaks, and they have pushed back against further rejections. In fact, according to Hansen, loopholes were created during the rulemaking process around the governor’s executive order that allowed companies to weaken its effectiveness.

In total, 223 Exxon Mobil projects worth nearly $580 million in tax abatements have been granted in the state of Louisiana under the ITEP program since 2000.

“ITEP is needed to compete with other states – and, in ExxonMobil’s case, other countries,” according to Exxon Mobil spokesperson Lauren Kight.

She pointed out that Exxon Mobil is the largest property taxpayer for the EBR school system, paying more than $46 million in property taxes in EBR parish in 2022 and another $34 million in sales taxes.

A new ITEP contract won’t decrease this existing tax revenue, Kight added. “Losing out on future projects absolutely will.”

The East Baton Rouge Parish School Board has continued to approve Exxon Mobil abatements, passing $46.9 million between 2020 and 2022. Between 2017 and 2023, the school district has lost $96.3 million.

Taxes are highest when industrial buildings are first built. Industrial property comes onto the tax rolls at 40% to 50% of its original value in Louisiana after the initial 10-year exemption, according to the Ascension Economic Development Corp.

Exxon Mobil received its latest tax exemption, $8.6 million over 10 years – an 80% break – in October 2023 for $250 million to install facilities at the Baton Rouge complex that purify isopropyl alcohol for microchip production and that create a new advanced recycling facility, allowing the company to address plastic waste. The project created zero new jobs.

The school board approved it by a 7-2 vote after a long and occasionally contentious board meeting.

“Does it make sense for Louisiana and other economically disadvantaged states to kind of compete with each other by providing tax incentives to mega corporations like Exxon Mobil?” said EBR School Board Vice President Patrick Martin, who voted for the abatement. “Probably, in a macro sense, it does not make a lot of sense. But it is the program that we have.”

Obviously, Exxon Mobil benefits, he said. “The company gets a benefit in reducing the property taxes that they would otherwise pay on their industrial activity that adds value to that property.” But the community benefits from the 20% of the property taxes that are not exempted, he said.

“I believe if we don’t pass it, over time the investments will not come and our district as a whole will have less money,” he added.

In 2022, a year when Exxon Mobil made a record $55.7 billion, the company asked for a 10-year, 80% property tax break from the cash-starved East Baton Rouge Parish school district. A lively debate ensued.

Meanwhile, the district’s budgetary woes are coming to a head. Bus drivers staged a sickout at the start of the school year, refusing to pick up students – in protest of low pay and not having buses equipped with air conditioning amid a heat wave. The district was forced to release students early, leaving kids stranded without a ride to school, before it acquiesced and provided the drivers and other staff one-time stipends and purchased new buses with air conditioning.

The district also agreed to reestablish transfer points as a temporary response to the shortages. But that transfer-point plan has historically resulted in students riding on the bus for hours and occasionally missing breakfast when the bus arrives late, according to Angela Reams-Brown, president of the East Baton Rouge Federation of Teachers. The district plans to purchase or lease over 160 buses and solve its bus driver shortage next year, but the plan could lead to a budget crisis.

A teacher shortage looms as well, because the district is paying teachers below the regional average. At the school board meeting, Laverne Simoneaux, an ELL specialist at East Baton Rouge’s Woodlawn Elementary, said she was informed that her job was not guaranteed next year since she’s being paid through federal COVID-19 relief funds. By receiving tax exemptions, Exxon Mobil was taking money from her salary to deepen their pockets, she said.

A young student in the district told the school board that the money could provide better internet access or be used to hire someone to pick up the glass and barbed wire in the playground. But at least they have a playground – Hayden Crockett, a seventh grader at Sherwood Middle Academic Magnet School, noted that his sister’s elementary school lacked one.

“If it wasn’t in the budget to fund playground equipment, how can it also be in the budget to give one of the most powerful corporations in the world a tax break?” Crockett said. “The math just ain’t mathing.”

Christine Wen worked for the nonprofit organization Good Jobs First from June 2019 to May 2022 where she helped collect tax abatement data.

Nathan Jensen has received funding from the John and Laura Arnold Foundation, the Smith Richardson Foundation, the Ewing Marion Kauffman Foundation and the Washington Center for Equitable Growth. He is a Senior Fellow at the Niskanen Center.

Danielle McLean and Kevin Welner do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.

Read More

Continue Reading

Spread & Containment

Revving up tourism: Formula One and other big events look set to drive growth in the hospitality industry

With big events drawing a growing share of of tourism dollars, F1 offers a potential glimpse of the travel industry’s future.

Published

on

By

Sergio Perez of Oracle Red Bull Racing, right, and Charles Leclerc of the Scuderia Ferrari team compete in the Las Vegas Grand Prix on Nov. 19, 2023. Tayfun Coskun/Anadolu via Getty Images

In late 2023, I embarked on my first Formula One race experience, attending the first-ever Las Vegas Grand Prix. I had never been to an F1 race; my interest was sparked during the pandemic, largely through the Netflix series “Formula 1: Drive to Survive.”

But I wasn’t just attending as a fan. As the inaugural chair of the University of Florida’s department of tourism, hospitality and event management, I saw this as an opportunity. Big events and festivals represent a growing share of the tourism market – as an educator, I want to prepare future leaders to manage them.

And what better place to learn how to do that than in the stands of the Las Vegas Grand Prix?

A smiling professor is illuminated by bright lights in a nighttime photo taken at a Formula 1 event in Nevada.
The author at the Las Vegas Grand Prix. Katherine Fu

The future of tourism is in events and experiences

Tourism is fun, but it’s also big business: In the U.S. alone, it’s a US$2.6 trillion industry employing 15 million people. And with travelers increasingly planning their trips around events rather than places, both industry leaders and academics are paying attention.

Event tourism is also key to many cities’ economic development strategies – think Chicago and its annual Lollapalooza music festival, which has been hosted in Grant Park since 2005. In 2023, Lollapalooza generated an estimated $422 million for the local economy and drew record-breaking crowds to the city’s hotels.

That’s why when Formula One announced it would be making a 10-year commitment to host races in Las Vegas, the region’s tourism agency was eager to spread the news. The 2023 grand prix eventually generated $100 million in tax revenue, the head of that agency later announced.

Why Formula One?

Formula One offers a prime example of the economic importance of event tourism. In 2022, Formula One generated about $2.6 billion in total revenues, according to the latest full-year data from its parent company. That’s up 20% from 2021 and 27% from 2019, the last pre-COVID year. A record 5.7 million fans attended Formula One races in 2022, up 36% from 2019.

This surge in interest can be attributed to expanded broadcasting rights, sponsorship deals and a growing global fan base. And, of course, the in-person events make a lot of money – the cheapest tickets to the Las Vegas Grand Prix were $500.

Two brightly colored race cars are seen speeding down a track in a blur.
Turn 1 at the first Las Vegas Grand Prix. Rachel Fu, CC BY

That’s why I think of Formula One as more than just a pastime: It’s emblematic of a major shift in the tourism industry that offers substantial job opportunities. And it takes more than drivers and pit crews to make Formula One run – it takes a diverse range of professionals in fields such as event management, marketing, engineering and beyond.

This rapid industry growth indicates an opportune moment for universities to adapt their hospitality and business curricula and prepare students for careers in this profitable field.

How hospitality and business programs should prepare students

To align with the evolving landscape of mega-events like Formula One races, hospitality schools should, I believe, integrate specialized training in event management, luxury hospitality and international business. Courses focusing on large-scale event planning, VIP client management and cross-cultural communication are essential.

Another area for curriculum enhancement is sustainability and innovation in hospitality. Formula One, like many other companies, has increased its emphasis on environmental responsibility in recent years. While some critics have been skeptical of this push, I think it makes sense. After all, the event tourism industry both contributes to climate change and is threatened by it. So, programs may consider incorporating courses in sustainable event management, eco-friendly hospitality practices and innovations in sustainable event and tourism.

Additionally, business programs may consider emphasizing strategic marketing, brand management and digital media strategies for F1 and for the larger event-tourism space. As both continue to evolve, understanding how to leverage digital platforms, engage global audiences and create compelling brand narratives becomes increasingly important.

Beyond hospitality and business, other disciplines such as material sciences, engineering and data analytics can also integrate F1 into their curricula. Given the younger generation’s growing interest in motor sports, embedding F1 case studies and projects in these programs can enhance student engagement and provide practical applications of theoretical concepts.

Racing into the future: Formula One today and tomorrow

F1 has boosted its outreach to younger audiences in recent years and has also acted to strengthen its presence in the U.S., a market with major potential for the sport. The 2023 Las Vegas race was a strategic move in this direction. These decisions, along with the continued growth of the sport’s fan base and sponsorship deals, underscore F1’s economic significance and future potential.

Looking ahead in 2024, Formula One seems ripe for further expansion. New races, continued advancements in broadcasting technology and evolving sponsorship models are expected to drive revenue growth. And Season 6 of “Drive to Survive” will be released on Feb. 23, 2024. We already know that was effective marketing – after all, it inspired me to check out the Las Vegas Grand Prix.

I’m more sure than ever that big events like this will play a major role in the future of tourism – a message I’ll be imparting to my students. And in my free time, I’m planning to enhance my quality of life in 2024 by synchronizing my vacations with the F1 calendar. After all, nothing says “relaxing getaway” quite like the roar of engines and excitement of the racetrack.

Rachel J.C. Fu does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

Read More

Continue Reading

Spread & Containment

Where Is R‑Star and the End of the Refi Boom: The Top 5 Posts of 2023

The topics covered on Liberty Street Economics in 2023 hit many themes, reflecting the range of research interests of the more than sixty staff economists…

Published

on

The topics covered on Liberty Street Economics in 2023 hit many themes, reflecting the range of research interests of the more than sixty staff economists at the New York Fed and their coauthors. We published 122 posts this year, exploring important subjects such as equitable growth and the economic impacts of extreme weather, alongside our deep and long-standing coverage of topics like inflation, banking system vulnerability, international economics, and monetary policy effects. As we close out the year, we’re taking a look back at the top five posts. See you again in 2024.

By Wenxin Du, Benjamin Hébert, and Wenhao Li 

Since the global financial crisis (GFC), long-maturity Treasury bonds have traded at a yield consistently above the interest rate swap rate of the same maturity. The emergence of the “negative swap spread” appears to suggest that Treasury bonds are “inconvenient,” at least relative to interest rate swaps. Our most-read post of the year documents this “inconvenience” premium and highlights the role of dealers’ balance sheet constraints in explaining it. The analysis further explores the role of the Treasury yield curve slope in driving dealers’ long position in Treasury bonds post-GFC and describes a framework for thinking about how shifts in monetary and regulatory policies can affect these market dynamics. (February 6)

By Alena Kang-Landsberg, Stephan Luck, and Matthew Plosser

This April post drew press and reader attention for offering updated estimates of banks’ deposit betas in order to capture the extent of the pass-through of the federal funds rate to deposit rates. The authors also compared the speed of adjustment of deposit betas in this interest-rate hiking cycle to four other such cycles since 1995. They reported, for example, a cumulative deposit beta on interest-bearing accounts of almost 0.4 for the fourth quarter of 2022; that measure was on par with “peak beta” in the 2015-19 hiking cycle and achieved over one year rather than three. (April 11)

By Andrew Haughwout, Donghoon Lee, Daniel Mangrum, Joelle Scally, and Wilbert van der Klaauw 

A sharp reduction in mortgage refinance originations seen in the Center for Microeconomic Data’s Quarterly Report on Household Debt and Credit for the first quarter provided an opportunity for these authors to mark an end to a refi boom that began with the COVID-19 pandemic. They look back at who refinanced, who cashed out on their home equity, and assess how much potential for consumption these transactions provided. They identify the COVID refi boom as lasting for seven quarters over 2020-21 in which approximately one-third of outstanding mortgage balances was refinanced (or fourteen million mortgages). Additionally, they estimate that $430 billion in home equity was extracted using mortgage refinances, a notable volume, though “not nearly as consequential as” the 2002-05 refi boom as a share of income. Some nine million borrowers refinanced their loans in the 2020-21 period without cashing out on equity and lowered their monthly mortgage payments—resulting in an aggregate reduction of $24 billion annually in housing costs, they reported.  (May 15)

By Katie Baker, Logan Casey, Marco Del Negro, Aidan Gleich, and Ramya Nallamotu 

These authors looked at trends in the long-run natural rate of interest, or r*, to find out if it had risen much in the aftermath of the COVID-19 pandemic, finding different answers from different models. According to VAR models, long-run r* remained roughly constant since late 2019, at 0.75 percent in real terms. A DSGE model by contrast had long-run r* rising by almost 50 basis points following the pandemic, to about 1.8 percent. The authors went on to discuss what would drive differences across the models and observed the relevance of the r* estimate for assessing the terminal (or peak) policy rate. (August 9)

See also:

The Evolution of Short-Run r* after the Pandemic (August 10)

By Andrew Haughwout, Donghoon Lee, Daniel Mangrum, Joelle Scally, and Wilbert van der Klaauw

This analysis of new U.S. household debt and credit data found “fairly large” increases in delinquency transition rates on credit card and auto loan balances for the year ended December  2022, up from unusually low levels during the pandemic and approaching pre-pandemic levels. When changing their focus from balances to borrowers, the authors found a higher percentage of credit card borrowers—particularly younger borrowers—missing payments than before the pandemic. They noted a similar although “slightly healthier” trend for auto loan performance with younger borrowers struggling relatively more. The authors explained that among the potential contributing factors to the uptick in delinquencies were rising car prices (the data showed the average new auto loan increasing to $24,000 in 2022 from $17,000 in 2019) and the end of pandemic support policies to households. (February 16)

Anna Snider is a senior editor in the Federal Reserve Bank of New York’s Research and Statistics Group.

How to cite this post:
Anna Snider, “Where Is R‑Star and the End of the Refi Boom: The Top 5 Posts of 2023,” Federal Reserve Bank of New York Liberty Street Economics, December 21, 2023, https://libertystreeteconomics.newyorkfed.org/2023/12/where-is-r-star-and-the-end-of-the-refi-boom-the-top-5-posts-of-2023/.


Disclaimer
The views expressed in this post are those of the author(s) and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author(s).

Read More

Continue Reading

Trending