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Public construction spending: Building up U.S. infrastructure

The FRED Blog has used U.S. Census data to compare private construction spending across different types of structures. Today we build on that topic by comparing the different types of public construction spending.

The FRED graph above shows spending data between 1993 and 2020. During most of these years, local, state, and federal construction projects amounted to one out of every four dollars spent on construction. As of 2020, public construction spending was $361 billion. Let’s look at the specific building blocks.

Over the past 20 years, almost all public construction spending has been directed to nonresidential projects, including new structures and improvements on existing ones. The Census reports on 12 categories of nonresidential spending. Of those, 4 categories comprise about three quarters of total expenditures. In descending order:

  • Highway and Street, ranging from interstate highways to neighborhood sidewalks
  • Educational, including schools, museums, and libraries
  • Transportation, comprising airports, ports, and mass transit facilities
  • Sewage and Waste Disposal, ranging from pipes to treatment plants

Our second FRED graph shows the proportional size, recorded between 2002 and 2020 (when annual data are available), of these four categories of construction projects. There’s a noticeable point of inflection after 2009, when the share of public construction spending on highways and streets and transportation grew. The share of spending on educational structures, however, continued to decrease. And the share of construction of sewers and waste disposal facilities remained constant. These changes reflect shifting spending priorities as well as the aging of both the population and the physical infrastructure that supports the daily business of life.

How these graphs were created: Search for and select “Total Private Construction Spending: Total Construction in the United States.” From the “Edit Graph” panel, use the “Add Line” tab to search for “Total Public Construction Spending: Total Construction in the United States.” Click “Add data series.” Use the “Format” tab to change the graph type to “Area” and the stacking to “Percent.” In the same tab, select area colors to taste.
For the second graph, search for and select “Total Public Construction Spending: Highway and Street in the United States.” From the “Edit Graph” panel, use the “Edit Line 1” tab to customize the data by searching for and selecting “Total Public Construction Spending: Nonresidential in the United States.” Next, create a custom formula to combine the series by typing in “a/b” and clicking “Apply.” Use the “Add Line” tab and repeat the customization step to add the other three lines to the graph. To change the line colors and mark types, use the choices in the “Format” tab.

Suggested by Diego Mendez-Carbajo.

Recreational Data in FRED

Using BLS data to track fun, 2007-2019

The FRED Blog has discussed the growing share of personal spending on recreation. But where, precisely, are households spending their leisure time?

FRED data from the Bureau of Labor Statistics (BLS) Industry Productivity release can show us a few things: The FRED graph above plots inflation-adjusted business activity, or real output, for five different industries in the amusement, gambling, and recreation industry subsector. The BLS reports output as an index value, which is set at 100 in 2007; so, the slopes of the lines represent the rate of output growth in each industry relative to that year.

  • Amusement park and arcade output (dark blue line) was a bit of a rollercoaster ride: Output decreased 23% between 2007 and 2010, but had mostly bounced back by 2019.
  • Bowling alley output (red line) also contracted between 2007 and 2010. But rather than heading straight into the gutter, it hit a strike during the past decade: 2019 output was almost 4% above its 2007 value.
  • Gambling industry output (purple line) seems to lend credence to the claim that “the house always wins” (in the long run, anyway). For almost a decade, output was consistently below its 2007 value—by an average well above 9%. But output grew between 2018 and 2019.
  • Golf course and country club output (light blue line) has been consistently under par—by an average of 7%—for the whole 2007-2019 time period.
  • Fitness and recreational sports center output (orange line) was almost all gain and no pain: Despite a minor slowdown during the 2007-2009 recession, business activity at establishments ranging from gyms to swimming pools pumped up with remarkable growth of 56% from 2007 to 2019.

Keep tabs on the FRED Blog, as we’ll discuss the changes brought by the COVID-19 pandemic to the recreation industry when data for 2020 become available.

How this graph was created: Search FRED for “Output for Arts, Entertainment, and Recreation: Fitness and Recreational Sports Centers.” From the “Edit Graph” panel, use the “Add Line” tab to search for and select” Output for Arts, Entertainment, and Recreation: Amusement and Theme Parks.” Repeat the process to add the remining three series in the graph. Use the menus in the “Format” tab to pick line colors and mark types. Change the start date of the graph to “2007-01-01.” Enjoy!

Suggested by Diego Mendez-Carbajo.

Residential segregation and redlining

In a recent post, the FRED Blog described how the Home Owners’ Loan Corporation (HOLC) created color-coded maps of 239 cities across the U.S. to indicate the riskiness associated with making mortgage loans in each neighborhood. This practice, adopted between 1935 and 1940, informed the supervisory work of the Federal Home Loan Bank Board over the lenders. Let’s recap the color codes for those maps:

  • Grade A: “Best” (shaded green), where properties were expected to increase or maintain a high appraised value, posing the lowest default risk for mortgage lenders.
  • Grade B: “Still desirable” (shaded blue), where properties were expected to maintain their appraised value, posing an acceptable risk of default for mortgage lenders.
  • Grade C: “Declining” (shaded yellow), where properties were expected to lose their appraised value, posing a high risk of default for mortgage lenders.
  • Grade D: “Hazardous” (shaded red), where properties were old or nearby unattractive or unhealthy industrial areas, therefore having minimal value and posing a dangerous risk of default for mortgage lenders.

The term redlining is derived from the red color used for residential neighborhoods of minimal value, where the housing stock was old or decrepit or nearby unattractive or unhealthy industrial areas. But redlining also alludes to discriminatory practices in residential lending.

Research by Chicago Fed economists Daniel Aaronson, Daniel Hartley, and Bhashkar Mazumder found that the largest concentrations of African Americans were in the lowest-graded areas and that very few resided in neighborhoods where real estate values were either stable or growing. The FRED graph displays each neighborhood’s percentage of African Americans: In 1960, for example, African Americans made up about 4% of the bluelined and greenlined neighborhoods combined, whereas they made up about 40% of the redlined neighborhoods alone.

In the 1970s, a new set of federal policies aimed at preventing discriminatory housing and financial practices partially reversed those patterns, which can also be seen in this FRED graph: In the 30 years after enactment of the new federal housing and lending policies, the African American population has become more evenly distributed across all HOLC-graded neighborhoods. Nevertheless, the decades of limited access to affordable credit and good-quality real estate have had long-lasting effects. As of 2020, data from the U.S. Bureau of Labor Statistics show African Americans have the lowest homeownership rates of all racial and ethnic groups in the United States.

How this graph was created: From FRED’s main page, browse data by “Release,” search for “The Effects of the 1930s HOLC ‘Redlining’ Maps,” and select “Summary Statistics.” Under “Panel A. Share of African Americans” check the box to the left of each of the four HOLC neighborhood categories. Next, click on the “Add to Graph” button. Lastly, from the “Edit Graph” panel, select the “Format” tab to match the color of each line to their HOLC designation and to turn off the “Recession shading.”

Suggested by Diego Mendez-Carbajo.

View on FRED, series used in this post: RLMSHAAHOLCNA, RLMSHAAHOLCNB, RLMSHAAHOLCNC, RLMSHAAHOLCND


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