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Components of M2

What is money? Well, there are many statistical definitions and FRED’s new release tables can help us sort them out. The release table for monetary aggregates shows us the various components of M2, the broadest monetary aggregate currently measured. The major components are represented in the graph above, as shares of total M2. The strictest measure of money is currency, in red at the bottom. Add to that checkable deposit accounts in banks and elsewhere, and you have M1. Add savings accounts, small time-deposit accounts, and money funds to M1, and you get M2.

The graph shows how the composition of M2 has changed over time. Deposit accounts in banks used to be much more important. This has changed as the financial industry and its customers have become more sophisticated. Also, regulatory changes as well as amendments to accounting rules have had a direct impact on measurements or have nudged market participants to hold liquidity or savings differently. But currency has been largely unaffected by such changes.

How this graph was created: Go to the Money Stock Measures release, choose a table from the top, click the series you want graphed, and click on “add to graph.” Then, open the tab for the currency component and move it to the bottom of the pile by clicking on the “down” button. Finally, under graph settings, set graph type to “bar” with stacking set to “percent.” You will notice that the early data series have only currency; thus, start the sample in January 1959.

Suggested by Christian Zimmermann

View on FRED, series used in this post: CURRNS, DEMDEPNS, NOM1M2N, OCDNS

Quits by industry

FRED recently introduced “release views,” which make it much easier to split an economic aggregate into various components or categories. Here, we use the Job Openings and Labor Turnover release to examine quits and hires by industry. In the graph above, it is striking how the ranking of industry quit rates remains the same no matter how well the economy is doing. Also, the quit rates of some sectors respond more strongly as the economy improves. Naturally, one is more likely to quit a job when it’s easier to find another. This is confirmed by looking at the industry hiring rates in the graph below, where the ranking and trend of the lines are the same as above. See the spike for government hiring around 2010? That corresponds to temporary workers hired for the decennial census.

How these graphs were created: For each graph, go to the Job Openings and Labor Turnover release, find the right release table from the top list, check the industry series you want, and click on the “add to graph” button.

Suggested by Christian Zimmermann.

View on FRED, series used in this post: JTS3000HIR, JTS3000QUR, JTS4000HIR, JTS4000QUR, JTS6000HIR, JTS6000QUR, JTS7000HIR, JTS7000QUR, JTS9000HIR, JTS9000QUR

The KC Fed’s labor market index in FRED

FRED has just added two labor market indicators from the Kansas City Fed. They’re computed from a collection of 24 times series related to the labor market. Two principal components, which are extracted from this data set using factor analysis, are displayed in the graph above: They describe about 80% of what is happening in the labor market. When both components are above zero, the labor market is looking good. When both are below, there is definite cause for concern.

How this graph was created: Search for the Kansas City Fed (through source or release), select the two series, and add them to a graph.

Suggested by Christian Zimmermann.

View on FRED, series used in this post: FRBKCLMCILA, FRBKCLMCIM

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