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More on churning in the labor market

The U.S. labor market churns with hirings and firings. The graph above represents this dynamic situation: In red (in negative territory) are all the job separations and in blue (in positive territory) are all the new hires. The end result is the net creation of jobs, shown in white. The series used here are not seasonally adjusted, so one can easily see strong patterns—both throughout individual years and during recessions and booms.

How this graph was created: Search for “Hires: Total Nonfarm” (level in thousands, not seasonally adjusted) and graph that series. Add the series “Total Separations: Total Nonfarm” (level in thousands, not seasonally adjusted). Transform the latter series by applying the formula -a. Create a third series, again using “Hires: Total Nonfarm” (level in thousands, not seasonally adjusted). Choose white for the third series. Add “Total Separations: Total Nonfarm” (level in thousands, not seasonally adjusted) to the third series. Transform the third series using the formula a-b. Then choose graph type “Area.”

A previous post also covered this topic.

Suggested by John Chilton

View on FRED, series used in this post: JTUHIL, JTUTSL

The many flavors of inflation

Inflation is the rate of growth of prices. But which prices? It all depends. Above, we have four popular measures of inflation for different slices of the economy. The consumer price index (CPI) looks at a typical U.S. consumer’s basket of goods and evaluates its price over time. The producer price index (PPI) looks at the cost of inputs into the production process. The GDP deflator considers all goods that are part of GDP, which excludes imports and includes exports (the opposite of CPI and PPI). Finally, the personal consumption expenditures (PCE) price index uses a continuously changing basket of goods that is the basis for the private consumption component of GDP. The graph shows similar trends for these series over the past 10 years, except that the PPI is much more volatile. Use the slider to look at other years, where the pattern holds.

And there’s more. Each of these inflation indicators can be broken down into more-specific versions. In FRED, you can find many subsets of data in our new release tables for CPI, PPI, GDP deflator, and PCE price index. A popular version of the CPI is the one that excludes food and energy, two highly volatile components with strong seasonal fluctuations. Some people use this version of CPI when they want to track “core inflation.” FRED recently added two new subsets of price information as well: One is an experimental dataset that calculates the CPI for those over 62 years of age, and the other is compiled by State Street and computes an index from prices posted on websites. The graph below contains these three price indexes, plus the CPI from the above graph. As expected, the CPI excluding food and energy is more stable. It is perhaps a surprise that inflation for website prices (the State Street index) is fluctuating so much, which could mean that goods offered online have special characteristics.

For more on inflation, take a look at these educational resources from the St. Louis Fed:

How these graphs were created: Start from a series page, modify the graph to show the units “Percent Change From Year Ago,” and then add the other series through the search feature within the form. Note that the units of these series will be automatically converted to percent change as you add them. For the bottom graph, you need to be sure to undo this conversion for the State Street index, as it is already expressed in percent change, and then apply the data transformation a*12 to this last series, as the original is a monthly inflation rate.

Suggested by Christian Zimmermann

View on FRED, series used in this post: CPIAUCSL, CPIEALL, CPILFESL, GDPDEF, PCECTPI, PPIACO, USINFL

Some economies get stuck

If you want to compare economies, a good source is the World Development Indicators from the World Bank. Economic definitions differ and data exist in different currencies, but the World Bank makes the relevant reconciliations. For example, their data are in 2005 U.S. dollars (and thus in real, not nominal, terms). These graphs depict two countries currently in the news whose economies have stagnated. The first is Venezuela, which had been much richer than its neighbor Colombia but has had essentially no growth over the sample period. The second is the Ukraine, which suffered a deep recession in the early 1990s, along with other former Soviet bloc countries. The Ukraine never recovered, while its neighbor to the north, Belarus, did. In fact, the Ukraine’s situation is even grimmer: The data show GDP per capita, but do not show that the population in the Ukraine has actually been falling for several years, which means total GDP has been on a sharp decline.

How these graphs were created: For both, you can either start from the World Development Indicators release and narrow down the choices using the tags or simply search for “constant GDP per capita” for the countries of your choice.

Suggested by Christian Zimmermann

View on FRED, series used in this post: NYGDPPCAPKDBLR, NYGDPPCAPKDCOL, NYGDPPCAPKDUKR, NYGDPPCAPKDVEN

Euro area “lowflation” becomes “deflation”

Inflation in the euro area is measured by the Harmonized Index of Consumer Prices (HICP). “Price stability is defined as a year-on-year increase in the Harmonised Index of Consumer Prices for the euro area of below 2%” (the red horizontal line). The Governing Council of the ECB clarified that this target should be interpreted as “below, but close to, 2% over the medium term.” In the euro area, as in several other advanced economies, inflation was below target but above zero for about two years (see Contessi, De Pace, Li, 2014). The IMF recently defined this environment as “lowflation.”

The most recent measurements for the euro area have shown mild deflation, with year-on-year inflation rates slightly below zero. Most recently, low inflation rates across many countries have been due to a combination of economic slack in the global economy and low oil prices. The weak economic conditions in the euro area are an additional factor pushing its inflation rates even lower.

How this graph was created: Search for “Harmonized CPI,” and the series shown here should appear first in the list. Change units to “Percent Change from Year Ago.” To add the red horizontal line, use the new feature in FRED to create a user-defined line: Open the “ADD DATA SERIES” panel, select “Trend Line,” and change both the start and end values to 2.

Suggested by Silvio Contessi.

View on FRED, series used in this post: CP0000EZ17M086NEST

Russell Indexes in FRED

FRED recently added a set of stock market performance indexes from Russell Investments, and this graph offers three of them. These indexes measure the total market value of U.S. stocks—that is, the value of these stocks over time, as dividends are reinvested. The Russell 3000 index includes the largest 3000 firms in the stock market, representing about 98% of total capitalization. The Russell 2000 index includes 2000 of the smallest securities, and the Russell 1000 index includes 1000 of the largest securities. While the small caps (the 2000 index) sometimes deviate from the larger companies, in the long run their return is remarkably similar. In other words, it is difficult to see from these indexes whether small caps have a return that is different from that of other stocks.

How this graph was created: Go to the Russell source, select the series you want, and click “Add to graph.”

Suggested by Christian Zimmermann

View on FRED, series used in this post: RU1000TR, RU2000TR, RU3000TR


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