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Renewables have increased the capacity for electricity production

So, capacity utilization has decreased

As we’ve discussed in a previous post, electricity production has outpaced sales. That suggests a growing number of households and businesses generate some or most of their own electricity. Today, a related idea sparks our curiosity: the ongoing decrease in capacity utilization of electric power generation, transmission, and distribution.

The graph above shows the annual industrial generation, transmission, and distribution of electricity (blue line). It’s measured as an index with a value of 100 in 2012. The positive slope of this line means that the production of electricity has increased over time.

The graph also shows the capacity utilization of electric power generation, transmission, and distribution (red line). It’s measured as the percent of total electricity production capacity that’s actually put to use. Between 1982 and 1999, this line also had a positive slope, meaning that utilities were using a growing percentage of the installed electric power generation and distribution network. Yet, since its 1999 peak, average capacity utilization has decreased.

Advances in renewable sources of electricity—for example, solar and wind—might help explain the diminished capacity utilization in overall electricity production.

  1. Solar panels and turbines depend on the weather, and the weather can be unpredictable.
  2. To ensure the lights go on at the flip of a switch, solar parks and wind farms that supply electricity are built over broad areas where sunlight and steady winds can be expected, but not always guaranteed.
  3. So, to meet periods of high demand (say, a hot summer) in times of low production (say, cloudy or windless days), excess production capacity must be built in.

Recommended reading: This Economics Synopses essay by Diego Mendez-Carbajo sheds more light on renewable sources of electricity and energy markets.

How this graph was created: Search for and select “Industrial Production: Utilities: Electric Power Generation, Transmission, and Distribution (NAICS = 2211).” From the “Edit Graph” panel, use the “Add Line” tab to search for and select “Capacity Utilization: Utilities: Electric Power Generation, Transmission, and Distribution (NAICS = 2211).” Next, from the “Edit Lines” tab, select Line 1 and under “Modify frequency” choose “Annual.” Repeat the same step for Line 2. Next, from the “Format” tab, under Line 2, select “Y-Axis position: Right.” Last, select “Mark type: Diamond” for both lines.

Suggested by Diego Mendez-Carbajo.

View on FRED, series used in this post: CAPUTLG2211S, IPG2211S

The unemployment benefits of the CARES Act

Expanding the definition of unemployed

If you’ve visited this blog before, you may have come across the official definition of unemployed: One needs to be currently looking for work, ready to work, and willing to work.

There are also requirements for receiving unemployment insurance benefits (e.g., previous work, waiting periods, eligibility periods, and asset tests) that vary across time periods and states. Plus, specific circumstances may affect benefits: How did you lose your job? Did you work sufficiently long before unemployment? Did you wait long enough before making your claim? Has your eligibility expired?

Given all these criteria and the time it takes to process a claim, there should be more unemployed persons overall than persons currently receiving unemployment insurance benefits. But the FRED graph above shows that the impossible has happened: More people are receiving benefits than are unemployed. What gives?

The specifics of the CARES Act allow people to receive benefits so that they do not have to report to work if their health conditions make it too dangerous. In such cases, the beneficiary is not technically unemployed, as there is no active job search going on. But benefits are still received through the unemployment insurance program of the person’s respective state.

How this graph was created: Search for and select the “continued claims” series. From the “Edit Graph” panel, use the “Add Line” tab to search for and select the “unemployment level” series; then apply formula a*1000 to get the same units. Finally, restrict the sample period to highlight the discussed episode.

Suggested by Christian Zimmermann.

View on FRED, series used in this post: CCSA, UNEMPLOY

Last hired, first fired? Employment losses across age groups

Trends in 30 years of BLS employment data

The COVID-19-related recession has been especially brutal, and its effects have been unevenly distributed. One example of disparity is employment among different age groups.

The FRED graph above shows that the youngest workers were by far the worst hit: From February to April 2020, 35% of the 16- to 19-year-olds and 30% of the 20- to 24-year-olds lost their jobs. The other age categories lost a lot, too—from 11% to 16%—but much less than the youngest cohorts. While all age groups recuperated to some extent by August, the gap is still considerable.

Are the young taking one for the team just for this recession? Or have they always been first to be let go? Let’s look at the past three recessions. The second graph, which covers the period of the Financial Crisis, also shows that the youngest group was hit distinctly and persistently, while the 55 and older group actually gained employment.

The 2001 recession, which was much milder than the two we just looked at, tells the same story in the graph above: big employment losses for the youngest group and slight increases for the 45- to 54-year-old group. And below, the 1990-91 recession looks much like the 2001 recession.

All in all, it appears “normal” that the 16- to 19-year-old age group is hit hardest by recessions and that the oldest workers are largely unaffected, at least in terms of employment. The current recession is a little different in that the older groups have also been affected, just not as much as the younger groups.

How these graphs were created: Start from Table A-9 of the Current Population Survey, select the series you want shown, and click “Add to Graph.” From the “Edit Graph” panel, select units “Index” with the start of the current recession and click “Apply to All.” Adjust the sample period. For the other graphs, adjust the index date and sample periods.

Suggested by Christian Zimmermann.

View on FRED, series used in this post: LNS12000012, LNS12000036, LNS12000089, LNS12000091, LNS12000093, LNS12024230

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