Go to the web site of the Federal Reserve Bank of St. Louis (FRED) (fred.stlouisfed.org) and download and graph the data series for the Net Interest Margin for All U.S. Banks (USNIM) from 1984 until the most recent quarter available. Go to the web site of the National Bureau of Economic Research (nber.org) and find the dates for business cycle peaks and troughs. (The period between a business cycle peak and trough is a recession.)
a. Describe how net interest margins move just before, during, and just after a recession.
b. Is there a long-term trend in net interest margins? What are the implications for bank profitability?