To help FRED users navigate the rapidly changing economic and financial environment, the Federal Reserve Bank of St. Louis has assembled two dashboards of FRED graphs. The first dashboard collects higher-frequency financial market variables. The second dashboard collects mostly monthly indicators that track expenditures, employment and unemployment, and key business and consumer surveys.
For some background on why and how economists and other analysts track economic and financial variables during stressful times, read on:
The World Health Organization declared the novel coronavirus—known as COVID-19—a pandemic. Johns Hopkins University is monitoring the spread of the virus and mapping the number of confirmed COVID-19 cases and fatalities worldwide.
The number of confirmed cases in the United States is rising, and U.S. financial markets have been tumultuous. For example, since hitting an all-time high on February 12, the Dow Jones Industrial Average has fallen by about 33 percent as of the writing of this post. Yields on 10-year Treasury securities plunged to an all-time low of 0.54 percent on March 9, though they have since rebounded modestly. Other key financial market indicators, such as commercial paper yields and yields on corporate bonds, have also exhibited stress. Financial market–based measures of inflation expectations have fallen sharply.
These financial market stresses have triggered numerous policy responses by the Federal Open Market Committee (FOMC), including two reductions in the FOMC’s federal funds target rate.
Clearly, the COVID-19 outbreak is a significant and rare event in U.S. history. It has led to widespread disruptions in economic activity, with an unknown duration and magnitude. But it can be characterized and monitored as an economic shock. So, economists and policymakers are monitoring key cyclically sensitive indicators such as initial claims for unemployment insurance, changes in employment, retail sales, and sales of light motor vehicles and new and previously sold (existing) homes.
During times of high and rising uncertainty, financial market variables often serve as reliable forward-looking signals of future economic conditions in the broader economy. A key example is the Treasury yield curve, which usually inverts prior to recessions. This forward-looking perspective is important because most of the important “real” data that economists and policymakers monitor—such as the unemployment rate or industrial production—are backward-looking. For example, the payroll employment numbers for March 2020 will be released on Friday, April 3. However, they will capture only payrolls for the survey week ending March 12. Labor market conditions could have changed dramatically since then, given the fast-moving nature of the COVID-19 outbreak and the responses by firms and the government. To get a more timely measure of labor market conditions, an analyst might instead look at the weekly initial claims data.
Our two new FRED dashboards collect these useful variables to help you monitor and better understand the trajectory of the economy and the state of financial markets. FRED account holders can create their own dashboards, either from scratch or by taking these two as starting points.
Suggested by Kevin Kliesen.