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Taking the pulse of the economy

Connecting the San Francisco Tech Pulse with other economic indicators

The San Francisco Tech Pulse is a measure of the overall health of the American tech sector; it’s calculated using variables such as employment and consumption in the sector and investment in technology. The graph shows the Tech Pulse as well as total U.S. employment, CPI, and GDP indexed to January 2000. These other indicators are common benchmarks of general economic health: Rising GDP, slow changes in CPI, and high employment all indicate a strong economy.

During the 2008 recession, the indicators behaved as we would expect them to during such an economic downturn: employment fell steadily, as did GDP, and CPI spiked and then fell in a spell of high inflation followed by deflation. The tech pulse also plummeted, which makes sense considering it’s the sum of the above indicators in a specific area of the economy. Yet the Pulse began to rise earlier than the general indicators. This early recovery, beginning in April 2009, could indicate that the tech sector was one of the first parts of the economy to gain strength after the recession and assisted in the overall economic recovery.

However, the overall impact of technology shouldn’t be overestimated. During the earlier recession, in 2001, the other indicators remained fairly stable compared with the Tech Pulse, which decreased substantially. This drastic fall could demonstrate the opposite of the pattern we see in 2008: that the technology sector was a major loser in that recession and it was the rest of the economy that helped maintain relative stability.

How this graph was created: Search for and select “San Francisco Tech Pulse.” From the “Edit Graph” panel and the “Add Line” tab, search for and select the other series shown here: “GDP,” “CPI,” and “Employment.” In the “Units” section, select “Index (Scale value to 100 for chosen date),” set the date as January 1, 2000, and click “Apply to all.”

Suggested by Maria Hyrc and Christian Zimmermann.

View on FRED, series used in this post: CPIAUCSL, GDPC1, PAYEMS, SFTPINDM114SFRBSF

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