Federal Reserve Economic Data

The FRED® Blog

Dating a recession

FRED marks the spot

A recession is a significant decline in general economic activity extending over a period of time. During recessions, unemployment increases and real income decreases.

FRED helps provide context to the data by showing when these recessions have occurred: Since 2006, every FRED series of U.S. data has included the option to display shaded areas on the graph to indicate the peaks and troughs of business cycles, as dated by the National Bureau of Economic Research (NBER).

The Business Cycle Dating Committee at the NBER dates the start of each recession after a lag of several months and dates the end of a recession after an even longer lag: According to the NBER, business cycle peaks are announced an average of 7.8 months after their dating and business cycle troughs are announced an average of 15.8 months after their dating.

The FRED team quickly updates its database with any new information. In fact, the recession that started in February 2020 is now visible on the FRED graph above. In graphs with data at a daily frequency, the peak of the business cycle is marked by a bar set on February 1, 2020. In graphs with monthly data, it is marked by a vertical line.

FRED can’t yet set a recession end date, so from February 2020 onward the graph is shaded. But if you want to gauge when the current recession may be over (ahead of official word from the NBER), consult these FRED series: a recession probability index computed by Marcelle Chauvet and Jeremy Piger and the real-time Sahm Rule Recession Indicator. When the recession probability index has substantially decreased or the Sahm indicator has peaked, the recession has likely ended. Check the FRED data regularly so you get that good news asap.

How this graph was created: Search for “10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity” and expand the date range to include the recession that lasted from December 3, 2007, to June 3, 2009.

Suggested by Keith Taylor, Yvetta Fortova, and Diego Mendez-Carbajo.

View on FRED, series used in this post: T10Y2Y

Government spending on police

State and local expenditures data from the BEA

As police presence, tactics, and department funding are being discussed, the FRED Blog offers some data to add to the conversation.

The graph above shows a category of government expenditures, “public order and safety,” as listed in the national income and product accounts from the Bureau of Economic Analysis. One series (in blue) is total government, and one series (in red) is state and local government.

These expenditures, which include both police and fire departments, are a small part of government spending, but they have continually grown. This isn’t surprising, as the data aren’t adjusted for inflation, population growth, or economic growth.

The second graph shows state and local expenditures specifically for police as a share of all state and local government expenses. For 2018, police expenditures were 4.79%, which is at the higher end of the range. The low, in 1980, was 4.25%.

How many people are in the police force? The Current Population Survey helps us here, making the distinction between those who patrol and those in supervision and detective roles. As of 2019, the total was 766,000, with a slight increase in the former and stable if not decreasing numbers in the latter. Note that these numbers include both public and private police forces.

This fourth graph shows how much police are paid. The Current Population Survey doesn’t provide averages, but rather medians: So, half are paid more and half are paid less than the values shown. These values aren’t inflation-adjusted and do not include benefits. Overtime pay is included, though.

The final graph is the same as the previous one, but the wages are adjusted for inflation. There’s quite a bit of fluctuation, likely due to changes in overtime. And there’s a slight upward trend, which can come from higher hourly pay, more overtime, or a combination of the two.

How these graphs were created: First graph: Search FRED for “public order and safety” and click on the series encompassing all government levels. From the “Edit Graph” panel, use the “Add Line” tab to search for and select the state and local government series with the same keywords. Second graph: Start with the graph for state and local police expenses. From the “Edit Graph” panel, add a series through the “Customize data” search bar (different from the Add Line tab): Search for and select state and local government expenses and apply formula a/b*100. Third graph: Search for “employed police” and select the series. Fourth graph: Search for “median police earnings” and select the series. Fifth graph: Start with the fourth graph. Use “Customize data” to add the CPI for both series and apply the formula a/b/*255.651 (the last number being the average value of the CPI in 2019).

Suggested by Christian Zimmermann.

View on FRED, series used in this post: CPIAUCSL, G160081A027NBEA, G160841A027NBEA, G160851A027NBEA, LEU0254491000A, LEU0254491900A, LEU0254544400A, LEU0254545300A, SLEXPND

Monetary policy tools today: Paying interest on all those reserves

As the school year winds down, the FRED Blog offers some advice to new graduates: Learning about monetary policy is a lifelong endeavor, because its tools can change even if your textbook doesn’t. (See our “textbook lag” posts, part I and part II.)

One way monetary policy tools have changed is that, effective March 26, the Board of Governors of the Federal Reserve System reduced reserve requirement ratios to zero percent: In response to the COVID-19 pandemic, the Board eliminated reserve requirements for all depository institutions to facilitate lending to households and businesses.

As the FRED graph above shows, since 2008, the volume of excess reserves has vastly outpaced the volume of required reserves. In fact, the total amount of bank reserves held at Federal Reserve Banks is at an all-time high.

Another recent change in the policy environment is described in a Page One Economics essay, “A New Frontier: Monetary Policy with Ample Reserves.” The Federal Open Market Committee (FOMC) adjusts the interest rate on excess reserves (IOER) to adjust the federal funds rate. if your textbook was published before 2008, it’s not likely to include this monetary policy tool.

Now, take your tassel from your graduation cap and bookmark the FRED Blog in your browser to keep on learning.

How this graph was created: Search for and select “Total Reserve Balances Maintained with Federal Reserve Banks.” From the “Edit Graph” panel, use the “Add Line” feature to search for and add “Reserve Balances Required; Reserve Balance Requirements.” Use “Format” to select “Graph type: Area” and choose your colors.

Suggested by Diego Mendez-Carbajo.

View on FRED, series used in this post: RESBALNSW, RESBALREQW


Back to Top