The Fed’s balance sheet shrunk in the latest week amid less borrowing by banks and a decline in commercial-paper holding. However, the central bank boosted its purchases of Treasurys and agency debt. TALF holdings remain unchanged.

In an effort to track the Fed’s actions, Real Time Economics has created an interactive graphic that will mark the expansion of the central bank’s balance sheet. Every Thursday afternoon, the chart will be updated with the latest data released by the Fed.

In an effort to simplify the composition of the balance sheet, some elements have been consolidated. Portfolios holding assets from the Bear Stearns and AIG rescues have been put into one category, as have facilities aimed at supporting commercial paper and money markets. The direct bank lending group includes term auction credit, as well as loans extended through the discount window and similar programs.

Central bank liquidity swaps refer to Fed programs with foreign central banks that allow the institutions to lend out foreign currency to their local banks. Repurchase agreements are short-term temporary purchases of securities from banks, which are looking for liquidity and agree to repurchase them on a specified date at a specified price.

Click and drag your mouse to zoom in on the chart. Clicking the check mark on categories can add or remove elements from the balance sheet.

An upcoming Census Bureau report — previewed as a poster at a demographers conference we are attending — looks at the phenomenon of women voluntarily leaving the workforce after having kids. The media has long weighed in on this topic, enough that a few Census demographers decided to give the trend a closer look, using data from the American Community Survey.

Their finding — in contrast to media accounts but similar to some economists — is that most working women return to the work force a year after having a child. With women’s earnings making up a significant chunk of household income, the demographers say, families may find it too costly to punt on a second paycheck or an additional retirement account.

The Census study found that women at the highest income levels (those above $200,000), or whose husbands are at the highest income levels, are slightly more likely than median income earners to opt out of the labor force — meaning that, indeed, some rich women bail out on work to raise their kids.

Another group that was more likely to opt out were women with household incomes less than $50,000 — and among that group the opt-out effect was largest among those with household incomes less than $20,000. In other words, they can’t afford child care so they stay home instead of working.

Officials were quick to correct a gaffe by Vice President Joe Biden this morning warning about travel amid swine flu fears, but the comments underscore the biggest economic threat of a pandemic.

On the Today Show Biden was asked what he would say to a member of his family thinking of traveling on a commercial airline to Mexico. “I would tell members of my family — and I have — I wouldn’t go anywhere in confined places now,” the vice president said. “You’re in confined aircraft. When one person sneezes it goes all the way through the aircraft. I would not be — at this point, if they had another way of transportation — suggesting they ride the subway. From my perspective what it relates to is mitigation. If you’re out in the middle of a field and someone sneezes, that’s one thing. If you’re in a closed aircraft or a closed container, a closed car, a closed classroom, it’s a different thing.” (Watch the appearance here.)

The White House released a clarification, indicating that Biden meant people should only avoid confined places if they are sick. Later, CDC acting director Richard Besser responded to the comments. “I think flying is safe. Going on the subway is safe. People should go out and live their lives,” he said.

While government officials are doing their best to stem the risks of a spreading pandemic, they must walk a fine line so as not to inspire panic. If the public becomes unnecessarily cautious, it could have a severe impact on a weakened economy that is just beginning to show signs of stabilization. A recent report by the World Bank suggested that the largest economic impact from a pandemic comes not from mortality or work absenteeism, but in efforts to avoid infection.

“The relative magnitude of these three factors differs considerably: people’s efforts to avoid infection are 5 times more important than mortality and more than twice as important as illness,” the World Bank said. That same report put the global cost of a moderately severe pandemic at around $2 trillion.

Biden’s comments look unnecessarily alarmist as long as the mortality and infection rates are relatively low. However, as Ezra Klein, who looks at the study “The Effectiveness of Policies to Control a Human Influenza Pandemic” by Arin Dutta, points out if the pandemic becomes more severe, “Biden’s warning will come to be seen as, if anything, insufficiently alarmist.”

If you’re thinking of buying a new mower, trimmer or garden tiller, it might be worth waiting. Yesterday, three congressional delegates from Vermont introduced legislation that, if passed, would offer consumers a 25% tax credit up to $1,000 toward the purchase of environmentally-friendly lawn, garden or forestry power equipment.

The bill titled “Greener Gardens Act” (every pun intended presumably) is the brainchild of Sen. Patrick Leahy (D-Vt.), Sen. Bernie Sanders (I-Vt.) and Rep. Peter Welch (D-Vt.) and is designed to provide “immediate incentive for people to purchase clean, alternative fuel engines that…operate on little or no fossil fuel.” Qualifying equipment would include that powered by a motor drawing current from solar, electricity or rechargeable or replacement batteries, as well as equipment run off other alternatives to gasoline–such as propane or compressed natural gas. It would also include “hybrid” machines whose cutting systems are powered by a generator or electrical storage device combines with a small engine.

While such equipment is still not widely available compared to gas-operated machines, more well-known brands such as Troy-Bilt, Cub Cadet, Ariens, Husqvarna, and Black & Decker– among others–have been adding non-gasoline fueled products to their lineup in recent years. One notable constituent of the bill’s authors is Neuton Inc. of Vergennes, Vt., which makes battery-powered mowers (pictured here) and yard tools.

The bill was endorsed by the Outdoor Power Equipment Institute, a trade association, which says it will push for any final legislation to include provisions for the commercial market as well as for homeowners.

Tax credits are gaining fast traction as a way to help fuel President Barack Obama’s clean energy agenda. Right now, there are lucrative incentives in place for making energy-efficient home improvements. They include up to $1,500 in tax credits for adding qualifying windows, doors, insulation, roofs, heating and cooling equipment, water heaters and even wood and pellet stoves to your house in 2009 and 2010. Perks for installing pricier solar technology, small wind-energy systems or a geothermal-well system include a tax credit of 30% of qualifying expenditures with no upper limit through 2016.

Readers, are you investing in any energy-efficient home improvements or environmentally-friendly lawn equipment this year? Do these tax credits make such upgrades more appealing?

Officials were quick to correct a gaffe by Vice President Joe Biden this morning warning about travel amid swine flu fears, but the comments underscore the biggest economic threat of a pandemic.

On the Today Show Biden was asked what he would say to a member of his family thinking of traveling on a commercial airline to Mexico. “I would tell members of my family — and I have — I wouldn’t go anywhere in confined places now,” the vice president said. “You’re in confined aircraft. When one person sneezes it goes all the way through the aircraft. I would not be — at this point, if they had another way of transportation — suggesting they ride the subway. From my perspective what it relates to is mitigation. If you’re out in the middle of a field and someone sneezes, that’s one thing. If you’re in a closed aircraft or a closed container, a closed car, a closed classroom, it’s a different thing.” (Watch the appearance here.)

The White House released a clarification, indicating that Biden meant people should only avoid confined places if they are sick. Later, CDC acting director Richard Besser responded to the comments. “I think flying is safe. Going on the subway is safe. People should go out and live their lives,” he said.

While government officials are doing their best to stem the risks of a spreading pandemic, they must walk a fine line so as not to inspire panic. If the public becomes unnecessarily cautious, it could have a severe impact on a weakened economy that is just beginning to show signs of stabilization. A recent report by the World Bank suggested that the largest economic impact from a pandemic comes not from mortality or work absenteeism, but in efforts to avoid infection.

“The relative magnitude of these three factors differs considerably: people’s efforts to avoid infection are 5 times more important than mortality and more than twice as important as illness,” the World Bank said. That same report put the global cost of a moderately severe pandemic at around $2 trillion.

Biden’s comments look unnecessarily alarmist as long as the mortality and infection rates are relatively low. However, as Ezra Klein, who looks at the study “The Effectiveness of Policies to Control a Human Influenza Pandemic” by Arin Dutta, points out if the pandemic becomes more severe, “Biden’s warning will come to be seen as, if anything, insufficiently alarmist.”

Of the three government indicators Thursday — personal income/spending, jobless claims and employment cost index — the ECI was probably the least relevant to markets since it didn’t provide a lot of new information about the state of the economy.

But it does appear to have solved a mystery from recent monthly employment data: why the miserable jobs market hasn’t been reflected in wages and salaries. Until now.

And it suggests deflation may be more of a risk than other wage data have indicated.

The ECI expanded a record low 0.3% in the first quarter from the fourth quarter of last year. For the private sector it was just 0.2% and many of the hardest-hit industries experienced outright wage and benefit deflation including finance, construction and professional services.

For the year, wages and salaries were up just 2.2%.

In contrast, average hourly earnings are running at a sturdier 3.4% annual clip. As Zach Pandl of Nomura explained, average hourly earnings are affected by compositional shifts within the employment market. In other words, if job losses are concentrated in lower-earning sectors, then average hourly earnings would look artificially higher. ECI is a “cleaner” measure, he said.

And the ECI lends support to Phillips Curve adherents that see a relationship between labor markets and inflation. When slack builds, then wage demands diminish. And since labor makes up the bulk of consumer prices, inflation comes down as a result. If enough slack builds, then the economy could even fall into deflation.

In contrast, the average hourly earnings data have backed the “sticky price” argument that many costs and prices (especially wages and services) stay pretty anchored even in the face of rising and falling economic slack. That school of thought suggests low inflation, but not deflation.

Stribling & Associates

The owner of circus entrepreneur James Bailey’s 1880s mansion in New York cut the price to $6.5 million after listing the home in November for $10 million — a drop of 35% in less than a year. High-end homes are lingering in this market.

Loans to borrowers who bought pricey homes are going bad at a faster clip.

Barclays Capital notes the “disturbing trend”–worsening delinquencies among so-called jumbo loans that are too large for government backing. The investment bank tracks the share of loans that roll into delinquency every month, and nearly 0.88% of jumbo loans made in the first half of 2007, for example, went delinquent in March from February, up from 0.77% in the previous month.

Some of those delinquencies will become foreclosures. Foreclosure starts have jumped by 221% among jumbo loans made to prime borrowers, or those with good credit, according to March mortgage report from LPS Applied Analytics. That’s more than among any other loan type.

There are plenty of reasons to explain the growing stress for loans made to borrowers once thought to be immune from the credit crunch. White-collar workers have been hard hit by losses in recent months, especially after last fall’s market meltdown.

And while mortgage rates have fallen to record lows in recent weeks, that’s only been the case for conforming loans that are eligible for government purchase—those limits are set at $417,000 in most parts of the country and rise to as high as $729,750 in the priciest markets.

It’s a different story for the jumbo loans that exceed those limits. The market for those loans has been hard hit by the credit crunch for the last 18 months, and many banks have ratcheted up borrowing standards and are charging higher fees. (See “Jumbo Mortgages, Jumbo Headaches“)

With financing harder to reach, high-end homes aren’t selling, even as home sales at the bottom end gain steam as bank-owned homes sell for rock-bottom prices. Phoenix, for example, has a 55-month supply of homes priced above $1 million, according to sales data compiled by housing analyst Robert Long.

All of this is raising concerns that more jumbo borrowers could be at risk of delinquency. If you’re a jumbo borrower who’s facing delinquency and you’re willing to be interviewed, email me nick.timiraos@wsj.com.

Mortgage rates continue to fall, a boon to homeowners eager to refinance mortgages and to those courageous enough to ponder buying new houses. And, in an unusual development, rates on adjustable rate mortgages exceed those on 30-year fixed-rate loans, according to mortgage giant Freddie Mac.

Rates on 30-year fixed-rate mortgages fell to 4.78% in the week ended April 30, matching the one set in the week ended April that was the lowest since mortgage giant Freddie Mac began tracking the rate in 1971. The comparable rate a year ago averaged 6.03%. The decline, in part, reflects the aggressive moves by the Federal Reserve to push down mortgage rates by buying mortgage-backed securities and lending to Freddie Mac and its sibling Fannie Mae.

Freddie Mac said the fixed rate on 15-year mortgages averaged 4.48%, down from 5.62% a year ago and the lowest level since Freddie Mac began tracking this rate in August 1991.

“Although long-term mortgage rates eased slightly this week, ARM rates remain elevated relative to those fixed-rate mortgages,” said Frank Nothaft, Freddie Mac vice president and chief economist. “For instance, interest rates for 1-year ARMs exceeded those for 30-year fixed-rate mortgages over the last two weeks; this is the first time this has happened since Freddie Mac began collecting data for ARMs in January 1984. One-year Treasury-indexed ARMs averaged 4.82% this week, down from last week when it averaged 4.91%. At this time last year, the 1-year ARM averaged 5.29%

Freddie Mac notes that house prices rose for the second consecutive month in February, the first back-to-back increase since April 2007, according to the Federal Housing Finance Agency. (Read a related post.) Among the nine Census divisions, six experienced positive gains in February, led by a monthly increase of 3.8% in the Pacific.

Real Time Economics is in Detroit attending the annual meeting of the Population Association of America, a demographers gathering where academics present papers, criticize the use (or misuse) of statistics and geek-out on Census data.

One poster that caught our attention was titled “Best Friends Forever?: Race and the Stability of Adolescent Friendships.” The study — presented by Jesse Rude and Daniel Herda, two sociology grad students at the University of California, Davis — examined friendships between middle school and high school students over a one-year period, and aims to see if racial differences play a role in friendship duration. They do. After one year, 20.5% of interracial friendships in the study were intact, versus 26.4% for same-race friends. “Are we all just over this race thing? Turns out we’re not,” says Jesse Rude, one of the co-authors of the study.

But there’s a silver lining. The effect of race diminished (though didn’t come close to disappearing) after controlling for several other variables — from family background to GPA, sports participation, and use of cigarettes and alcohol. Basically, the more similar kids were — jocks, nerds, delinquents, prom queens, etc. — the more likely they were to overcome their racial differences. (The biggest damping of the racial effect came from “closeness.”) But another significant racial bridge — more than GPA or “school attitudes” — was the use of alcohol and cigarettes. Kids of different races who drink and smoke together (or relish in not drinking and not smoking together) were more likely to stay friends.

Dallas’s Case-Shiller numbers have stayed flat since 2000. See the map.

Why didn’t Texas, unlike other Sunbelt states, see a housing bubble?

In Dallas, home prices have stayed flat since 2000 and they fell just 4.5% in February from a year ago, according to the Standard & Poor’s/Case-Shiller index figures released Tuesday. That compares with an 18.6% decline nationwide over the same period. Foreclosure rates in the state have remained low.

The Rortybomb blog argues that the state’s strict lending laws had something to do with it. Texas has a ban on prepayment penalties, it also doesn’t allow balloon loans or negative amortizing loans where the loan payment is less than the interest on the loan.

But a handful of states, including Alaska and Vermont, had also banned prepayment penalties, and others, including hard-hit Minnesota, joined in banning them from the subprime market as that bubble inflated, according to the Center for Responsible Lending.

Others have argued that high property taxes and other land regulations in Texas discouraged the Lone Star State from jumping into the housing boom with two boots.

California real-estate investor Bruce Norris notes that the cost of owning a property free and clear in Texas can range from double to triple the cost in California. In Texas, a $150,000 home carries an average $5,300 in taxes and insurance, compared to $2,050 in California. (The gap is more pronounced among $1 million homes, where average taxes and insurance reach $32,500 in Texas, compared to $11,500 in California.)

Any Texans out there? Care to chime in?