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What are the odds? Prices differ between hotels and casino hotels

The FRED Blog recently discussed the large reductions in travel related to the COVID-19 pandemic. Today we expand that analysis to include a specific aspect of travel: hotel stays.

The graph above shows producer price index (PPI) data from the Bureau of Labor Statistics (BLS) that measure price changes from the perspective of the seller. Percent changes in prices from a year ago are shown for both stand-alone hotels (in gold) and hotels attached to casinos (in red).

Seller prices began dropping for stand-alone hotels in February, and the downturn has persisted through the summer: During peak season (June to August) prices were, on average, 17% lower than they were a year ago.

But hotels attached to casinos show an increase for most of this time period. This disparity reflects the different drivers of consumer demand for stays at these two different types of hotel. Moreover, it may reveal different levels of risk aversion during a pandemic among these consumers.

Learn more about COVID-19’s impact across industries from this Economic Synopses by Matthew Famiglietti, Fernando Leibovici, and Ana Maria Santacreu.

How this graph was created: Search for and select “Producer Price Index by Industry: Hotels (Excluding Casino Hotels) and Motels.” From the “Edit Graph” panel, use the “Add Line” tab to search for and select “Producer Price Index by Industry: Casino Hotels.” Use “Edit Line 1” to change “Units” to “Percent Change from Year Ago” and click “Copy to All” to apply this change to line 2. Use the “Format” tab to select “Graph type: Bars” and select colors to taste.

Suggested by Diego Mendez-Carbajo.

View on FRED, series used in this post: PCU7211172111, PCU721120721120

Unemployment rates by country during COVID-19

Considering differences in pandemic-related policies

In a previous post, we mapped unemployment claims for U.S. states during the COVID-19 pandemic. Today, we compare the unemployment rates of seven high-income countries.

The graph shows monthly, seasonally adjusted unemployment rates for Japan, Germany, U.K., U.S., Canada, France, and Italy. These rates are harmonized—that is, the same definition of unemployment is used for all these countries.

U.S. unemployment spiked from 3.5% in February 2020 to 14.7% in April. (It spiked similarly in Canada, from 5.6% to 13%.) But unemployment did not rise significantly in other countries. What explains this difference?

Countries that reduced the spread of COVID-19 early on have had less severe economic contractions, which may help explain the low unemployment rates in Japan and Germany. However, this doesn’t explain the overall trend of higher unemployment in the U.S. when the U.K., France, and Italy have also been heavily impacted by the pandemic.

In Europe and Japan, the government’s approach to unemployment during COVID-19 has focused on maintaining employer-employee relationships. Significant subsidies have been provided for employers to maintain their workforces, leading to fewer applications for unemployment insurance benefits. In the U.S., policy has focused on providing unemployment benefits to workers that have already been laid off or furloughed. It remains to be seen which approach will be more effective in supporting labor markets.

How this graph was created: From FRED’s main page, browse data by “Source.” Click on “Organization for Economic Co-operation and Development” and then “Main Economic Indicators.” On the left, filter by “Unemployment,” “Harmonized,” and “Seasonally Adjusted.” Select the monthly unemployment rates for Germany, Japan, the United States, Italy, France, Canada, and the United Kingdom. Select “Add to Graph” at the top of the page. From the “Edit Graph” panel, use the “Format” tab to change colors/line markers as desired.

Suggested by Iris Arbogast and Yi Wen.


The Fed’s balance sheet

Assets and liabilities of the Federal Reserve Banks

A graph is an excellent way to visualize economic data, and FRED gives you the power to construct these graphs. But some data—balance sheets, for example—convey information more clearly in table form.

Say you want to understand the Fed’s response to the current pandemic. A good place to start is the Fed’s balance sheet, which is published weekly: Table 5: Consolidated Statement of Condition of All Federal Reserve Banks.* Here, the consolidated assets and liabilities of the Federal Reserve Banks are offered in three columns: the most recent release, the previous release, and the release from a year ago. (You can also select specific releases using the calendar tool. The data below are as of September 16, 2020.)

Over the past year, the Fed’s assets have grown by about $3.2 trillion. If we inspect asset categories, we can see which are most responsible for the increase in total assets. The holdings of “U.S. Treasury securities” (purchases of notes and bonds with maturities longer than a year) grew by  $2.3 trillion, which is most of the overall increase.

An increase in assets implies a corresponding increase in liabilities. Here, we can see that currency (“Federal Reserve Notes”) has not grown much over the past year compared with other categories. Bank reserves (“Other deposits held by depository institutions”) and the “U.S. Treasury General Account” have grown significantly—about $1.5 trillion and $1.4 trillion, respectively. Of course, you could also graph these series to see how they’ve evolved. Just click on the checkbox next to each table item and select “Add to Graph”:

As we can see, since late 2008, the Fed’s purchases of U.S. Treasuries and bank reserves track each other closely. This is because the Fed buys securities from banks, which in turn have kept most of the proceedings from these sales at their account with the Fed. Recall that the Fed, as part of its response to the Financial Crisis of 2007-08, started paying interest on bank reserves in October 2008.

More recently, and especially since the current pandemic started, there is a noticeable gap between Treasury holdings and bank reserves. This gap is explained by the Treasury account at the Fed, which consists of the funds that the federal government has not yet spent. Over the past few months, the federal government has issued large amounts of new debt, some of which has been bought by the Fed with the rest absorbed by the market. However, a significant portion of the funds raised with this new debt remain unspent, as evidenced by the large size of the Treasury account. Over time, as these funds get spent, they will be transformed into currency and bank reserves.

*To reach this table, go to FRED’s homepage: Click on “Browse data by…Release.” On the releases page, scroll down to “H.4.1 Factors Affecting Reserve Balances,” which displays all the tables associated with this release, including Table 5.

Suggested by Fernando Martin.

View on FRED, series used in this post: WDTGAL, WLODLL, WSHOTSL

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