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Supply and demand shocks to food prices: FRED data à la carte

Rising meat prices, falling fish prices

Posted on August 17, 2020

In an earlier post, the FRED Blog discussed the price changes of a classic lunch option. Today, we discuss some dinner options, showing how the market prices for “surf and turf” have changed recently.

The Turf

The graph above uses U.S. consumer price data from the Bureau of Labor Statistics to show the percent change in price from a year ago for three “turf” dining options: pork, beef, and chicken. (Btw, We use percent changes from a year ago to account for any seasonal patterns.)

Pork chop prices are clearly hogging a lot of space in the graph. In fact, the average price of pork chops has grown by double digits since April 2020. Sirloin steak prices have also moved up dramatically during the same time period. Chicken prices have also grown, but they are last in the pecking order here.

These spikes in meat prices are the result of supply shocks. The Economic Research Service at the U.S. Department of Agriculture (USDA) describes the decrease in meat output resulting from COVID-19 outbreaks among workers at several meat-packing facilities. The USDA maintains a website with FAQs about the pandemic and food supply chain issues.

The Surf

The second graph puts fish and shrimp on the scales, using primary commodity price data from the International Monetary Fund to show the percent change in their prices from a year ago. The global price of fish has decreased since March 2020, and the global price of shrimp has also started to decrease. These price drops are the result of demand shocks. This report from the Food and Agriculture Organization (FAO) of the United Nations describes how the decreased demand for fishery products in the hospitality sector, another disruption related to the COVID-19 pandemic, has played a role in lowering global prices.

The FRED Blog Team will be digging up data on vegetarian and vegan dining options to cultivate a similar post. Stay tuned.

How there graphs were created: For the “turf” graph, start on the FRED homepage and browse data by “Release.” Search for “Average Price Data” and click on “Food.” From the table, select the “Steak, Sirloin, USDA Choice, Boneless, Per Lb. (453.6 Gm) in U.S. City Average,” “All Pork Chops, Per Lb. (453.6 Gm) in U.S. City Average”, and “Chicken, Fresh, Whole, Per Lb. (453.6 Gm) in U.S. City Average” series and click “Add to Graph.” Next, change the units of the series to “Percent Change from Year Ago” and click on “Copy to all.” Next, edit the graph through the “Format” tab and select “Graph type: Bars.” Last, select colors to taste. For the “surf” graph, search for “Global price of Shrimp, Monthly, U.S. Dollars per Kilogram, Not Seasonally Adjusted.” Next, edit the graph by clicking on “Add a line,” searching for “Global price of Fish, Monthly, U.S. Dollars per Kilogram, Not Seasonally Adjusted,” and clicking on “Add.” Edit the units and graph type as described above.

Suggested by Diego Mendez-Carbajo.

View on FRED, series used in this post: APU0000703613, APU0000706111, APU0000FD3101, PSALMUSDM, PSHRIUSDM

The impact of recessions on net worth

Uneven experiences by wealth quantile

Posted on August 13, 2020

Recessions take their toll in many ways, including on households’ net worth, a stock variable that measures the difference between the value of the assets and the value of the liabilities, or obligations, a person has accumulated over a lifetime. And, as you might expect, FRED has data on this topic.

We made some adjustments to the FRED graph shown here that could use a little explanation: We started with a graph of households separated into four different classes according to wealth. We changed the units of the asset data from millions of dollars to an index and then set the base period at the beginning of the Great Recession of 2007-2009.

Now we can compare how these four different classes of households (top 1% in wealth, next 9%, next 40%, and bottom 50%) fared after the largest and most protracted contraction in economic activity since 1981. (Not for nothing is that economic downturn called the Great Recession.) In the graph, the zero date represents the fourth quarter of 2007, when the Great Recession started. The dates numbered 1 to 40 represent the number of quarters after that initial date.

This downturn itself lasted six quarters, or two and a half years, from December 2007 to June 2009. And its impact on nominal household net worth was most marked for the bottom 50% wealth quantile: At the trough of the recession, the net worth of the lower half of households decreased anywhere from 23% up to 40%. Because the least wealthy mostly hold assets in the form of housing and consumer durables, the real estate market collapse associated with the Great Recession affected this group of households the most. Moreover, it took twice as long than for any other household group for their net worth to grow back to pre-recession levels.

Further Reading

  • For more on this topic, read the Economic Synopses essays from William Gavin and Diego Mendez-Carbajo.
  • For more on how the starts and ends of recessions are dated, check this FRED Blog post.
  • Previous FRED Blog posts have also examined how U.S. GDP has recovered after five recessions (1937, 1981, 1990, 2001, and 2007). By the way, GDP is a flow variable (compared with a stock variable such as household net worth) because it measures the value of all new goods and services produced in a country during a single year.

How this graph was created: From FRED’s main page, browse data by “Release.” Search for “Distributional Financial Accounts” and click on “Levels of Wealth by Wealth Percentile Groups.” From the table, select the “Total Net Worth” series held by an individual wealth quantile and click on “Add to Graph.” To change the units of the series to a custom index with integer periods, see here.

Suggested by Diego Mendez-Carbajo.

View on FRED, series used in this post: WFRBLB50107, WFRBLN09053, WFRBLN40080, WFRBLT01026

Consumption of goods and services during the COVID-19 recession

Some shirts, some shoes, but a lot less service

Posted on August 10, 2020

First, some background on the line graphs shown above and below: The zero “date” is the start of a recession. The x-axis “periods” are the number of months after the start date. And the data are from the BEA’s Personal Income and Outlay survey.

Now, what do they show? The main revelation is that real personal consumption expenditures on services have decreased since February 2020, the start of the current recession. And, at the time of this writing, expenditures on services remain below their pre-recession levels. The data show that consumption of goods has also decreased, but not as much, and it has largely recovered. So, shirts and shoes notwithstanding, there’s a lot less service.

This decline in spending on services is significant for two reasons:

  1. Personal consumption expenditures are the largest component of U.S. gross domestic product.
  2. Household purchases of services represent the majority of personal consumption expenditures, as seen in the pie chart above. (The red, Pac-Man-shaped segment is consumption of services last year.)

Our final FRED graph shows that, at the start of the Great Recession in December 2007, real personal consumption expenditures on services began to increase. At that time, households reduced spending on goods—both durable goods (automobiles, appliances, furniture) and nondurable goods (food, gasoline, clothing). A previous FRED blog post discusses the dips in household spending on goods during and after the 2007-2009 recession.

So, the recent decline in spending on services has meant lower personal consumption and reduced economic activity. As the economy opens back up, be sure to practice your three “W”s while shopping for goods and/or services: Watch your social distance. Wear your mask. Wash your hands.

How these graphs were created: From FRED’s main page, browse data by “Release.” Search for “Personal Income and Outlays” and click on “Table 2.8.6. Real Personal Consumption Expenditures by Major Type of Product, Chained Dollars.” From the table, select the “Durable goods,” “Nondurable goods,” and “Services” series and click “Add to Graph.” To change the units of the series to a custom index with integer periods, see here. For the pie chart, start from the release for real personal consumption expenditures, check the relevant series, and click “Add to Graph.” From the “Edit Graph” panel, use the “Format” tab to select graph type “Pie.”

Suggested by Diego Mendez-Carbajo.

View on FRED, series used in this post: PCEDGC96, PCENDC96, PCESC96


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