If you’re a renter and have been complaining that your rent keeps rising, the statistics seem to back you up. In the graph, the purple line shows the evolution of rents in the U.S. as a whole, while the light blue line shows the general price level (CPI). Clearly, rents are increasing faster than prices overall. Of course, location matters for anything related to housing, and there are large regional differences: Rents in the New York and San Francisco areas have clearly appreciated more than average. Rents in the Detroit area have increased but well below the average rate; still, they’re keeping up with general inflation.
Note, however, that the graph shows the evolution of rents, but not their level. It shouldn’t be too surprising that rents in 1984 (the beginning of this sample) were higher in New York and San Francisco than in Detroit. And that gap has increased even more over time.
How this graph was created: Search for “rent CPI CBSA” (which stands for core-based statistical area, a metropolitan area defined around a core) and select the area you want shown. We selected semi-annual data instead of monthly, as these data are not collected every month. Click on “Add to Graph.” Add the remaining two series the usual way: From the “Edit Graph” panel, open the “Add Line” tab, search for “rent CPI” and add it, then search for “CPI” and add it. The last step is to limit the sample period to start on 1984-01-01.
The deadline for filing personal income taxes is approaching fast, which you probably know. But how much do you know about the big picture for taxes? This FRED graph helps shed some light on the issue by showing the total amounts of federal taxes paid over the past 5 years, separated by the sources of those taxes. As of the fourth quarter of 2018, federal taxes amounted to over $2 trillion. Clearly, personal income taxes are far and away the largest contributor. Production taxes and import tariffs are now in second place, only recently surpassing corporate income taxes, which have decreased recently. In fourth place are taxes from the rest of the world.
Also, in the sample shown here, the recent tax reform is clearly visible, with dips in all sources of taxes from the fourth quarter of 2017 to the first quarter of 2018, with one exception: Production taxes and import tariffs increased from $133 billion to $149 billion, which partly accounts for the change in the rankings noted above.
How this graph was created: From the Federal Government Current Receipts and Expenditures release table, check the relevant series and click “Add to Graph.” Then, from the “Edit Graph” panel, open the “Format” tab, and select graph type “Area” and “Stacked.” You may have to move a series or two up in the order if their last value is missing.
Is it worth it to buy 1-month Treasury bills? The above FRED graph shows their returns in recent years: While they often get very close to zero, at least they’re positive.* But “positive” may not count for much since we have to account for inflation. So let’s redo the graph by subtracting inflation from the return.
This exercise isn’t as simple as it might appear: First, we must factor-in inflation over the life of the bill, which is shorter than the period in which inflation is typically reported. Second, the Treasury return that’s reported in the data is annualized, meaning the monthly return is compounded to an annual return.
So here’s what we need to do to the CPI:
Take the percent change from the previous month, to match the maturity of the (1-month) bill
Divide it by 100, to get rid of the % units
Add 1, to prepare for compounding
Take the power of 12, to compound for one full year (to match the annualized Treasury rate)
Remove 1
Multiply by 100 to express it back in % units
Subtract the result from the Treasury rate
The result shows that the real return on the 1-month Treasury bill is very often negative. But simply holding on to your money would have been worse, as money is notorious for earning no interest whatsoever.
*In December 2011, the nominal return actually hit 0.00%.
How these graphs were created: For the first graph, search for “one month Treasury” and select the monthly series. For the second graph, take the first, go to the “Edit Graph” panel, add the CPI series, change its units to “Percent Change,” and apply formula a-((1+b/100)^12-1)*100.
