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The comovement of investment and GDP

There’s much more to the business cycle than fluctuations in GDP. There are all sorts of other variables that comove (that is, that fluctuate in more or less systematic ways) with GDP. It’s easy to understand that, when GDP is going up, the unemployment rate often is going down. Other series that comove may not be so easy to see.

Here we use a scatter plot (instead of a line graph) to show comovement between GDP and private investment. The cloud of points is clearly following a lower-left to upper-right path, which shows positive comovement. (Economists like to say that private investment is procyclical.) Note also that the range of the growth rate for private investment on the y axis is much wider than that for GDP on the x axis, reflecting that investment is much more volatile than GDP.

How this graph was created: Search for and select “Real Gross Private Domestic Investment,” then add the series “Real Gross Domestic Product.” Apply “Percent Change” to both series and select “Scatter” in the graph settings. If you wish, reduce the width of the lines in the settings of the first series.

Suggested by Christian Zimmermann

View on FRED, series used in this post: GDPC1, GPDIC1

The rise of education and health services

There’s little doubt that the prices of education and health care have risen considerably over the past decades. One reason for this is that more and more people work in these fields. The graph displays the share of workers in the education and health services sector among all employees: The share was about 4 percent in the 1940s and is now above 15 percent. Note also that this sector appears to be quite recession-proof: The share has gone up in all recent recessions, mostly because general employment declined while this sector’s employment did not. Interestingly, the employment share systematically stays up when the recession is over.

How this graph was created: Search for and select “All Employees: Education and Health Services,” and then modify the existing series by adding the “All Employees: Total nonfarm” series and applying the data transformation “a/b.” Choose graph type “Area” in the graph settings.

Suggested by Christian Zimmermann

View on FRED, series used in this post: PAYEMS, USEHS

Add FRED to your blog or web page

FRED now provides a widget for your web page or blog—like the one shown here. You can fully customize it and choose up to 10 series. In this case, we chose some popular series for Ireland. But the entire FRED database is available for this widget.

Note that FRED account holders can also create dashboards with the series they like to follow closely. Dashboards are much more customizable and can be made public; for example, you can share them with your readers, coworkers, or students.

How this widget was created: Go to the Data Tools tab, then to the Embedded FRED Data section. Click on the Configure Your FRED Widget link: This form is preset with popular U.S. series, but you may add or delete series at will. Once done, click on “Get the Code!” and copy and paste the code where you want it.

Suggested by Christian Zimmermann

View on FRED, series used in this post: Settings must be an array


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