Federal Reserve Economic Data

The FRED® Blog

Overnight reverse repurchase agreements: Short-term parking for reserves

The FRED Blog has described the use of overnight repurchase agreements to add liquidity to financial markets when bank reserves are ample. Today, we discuss the use of overnight reverse repurchase agreements (ON RRPs).

As the name strongly implies, ON RPPs are the flip sides of overnight repurchase agreements. These operations allow financial institutions that cannot receive interest payments on their reserves to deposit funds at the Fed overnight (with a security held as collateral). These operations remove liquidity from financial markets. ON RRPs are executed by the Federal Reserve Bank of New York, and the FRED graph above shows that their volume has steadily grown since the second quarter of 2021.

Two factors are at play here. First, the planned influx of liquidity to depository institutions to facilitate lending to households and businesses during the COVID-19-induced recession has made reserves plentiful. Second, the rate awarded to depositing institutions was raised from 0 to 0.05% on June 18.

How the graph was created: Search for and select “Overnight Reverse Repurchase Agreements: Treasury Securities Sold by the Federal Reserve in the Temporary Open Market Operations.” Voilà!

Suggested by Diego Mendez-Carbajo.

U.S. net exports of technology have fallen since 2011

How have tech imports and exports changed?

The FRED graph above shows the quarterly evolution of U.S. net exports of technology, from Q1 1967 to Q1 2021. Net exports of technology are measured as royalties and license fees received minus royalties and license fees paid during this period (as a percentage of GDP).

The U.S. has always been a net exporter of technology and, hence, a net receiver of royalty payments. And net exports as a share of GDP have steadily increased from 0.12% in Q1 1985 to 0.48% in Q3 2011—an increase of 300%! But after 2011, there’s been a slow decline, reaching 0.28% in Q1 2021 (its lowest level since Q1 2002). What’s caused this decline?

The FRED graph below shows, separately, exports of technology in terms of royalties received and imports of technology in terms of royalties paid (again, as a percentage of GDP). While U.S. technology exports have steadily fallen from 0.70% in Q3 2011 to 0.51% in Q1 2021, imports have remained fairly stable. Hence, the decline in net exports has been driven exclusively by a decline in exports.

The decline in royalties received by the U.S. throughout the 2010s could be attributed to two factors. First, the rise of Silicon Valley tech giants and their use of royalty payments to shift profits and avoid taxes by moving their intellectual property to tax havens. Second, the U.S.’s standing as the sole global technological power has been rapidly challenged by China over the past few decades. In fact, look for a blog post on that topic in the next week.

How these graphs were created: First graph: Search FRED for “Royalties” and select “Exports of services: Royalties and license fees.” From the “Edit Graph” panel’s “Edit Line 1” tab, use the customize data search box to search for and add “Imports of services: Royalties and license fees” and “Gross domestic product.” Then use the formula box below to type in ((a-b)/c)*100. Second graph: Search FRED for “Royalties” and select “Exports of services: Royalties and license fees.” From the “Edit Graph” panel’s “Add Line” tab, search for and add “Imports of services: Royalties and license fees.” Go to the “Edit Line” tab for each of these series and use the customize data search box to search for and add “Gross domestic product.” Then use the formula box below to type in (a/b)*100.

Suggested by Ana Maria Santacreu and Jesse LaBelle.

View on FRED, series used in this post: B684RC1Q027SBEA, B908RC1Q027SBEA, GDP

The health of labor markets post-pandemic: The supply perspective

As we discussed in the previous post, firms everywhere are having serious difficulties filling vacancies. With these worker shortages on everyone’s minds, let’s discuss how the pandemic has shaped the workforce.

The FRED graph above shows the fraction of people who participate in the labor force—that is, who either have a job or are actively looking for one—by age group. In previous recessions, only teenagers had significant declines in participation rates; clearly, most workers who lost their jobs kept looking for another. In 2020, however, participation rates declined across the board, with would-be workers leaving the labor force in the face of widespread shutdowns, health concerns, school closures, and financial support from the government.

That said, different age groups clearly reacted to the recent recession in different ways. Older workers’ participation rates declined through 2021—probably led by a wave of early retirees—but prime-age workers’ rates plateaued slightly below their pre-pandemic levels. It’s likely that some would-be workers remain out of the labor force because of lingering health concerns and childcare needs.

Now, what about teenagers today? The participation rate for 16- to 19-year-olds has increased beyond its pre-pandemic level. It’s possible some of this is related to historically low undergraduate enrollment, with high school graduates opting for work in the tight labor market over potentially remote learning.

How these graphs were created: Search for and select “Labor force participation rate – 16-19 Yrs.” From the “Edit Graph” panel, use the “Add line” tab to search for and add “Labor force participation rate – 20-24 Yrs.” Do the same for “Labor force participation rate – 25-54 Yrs.” And “Labor force participation rate – 55 Yrs. & Over.” Set the date range to mirror the dates shown in the blog post.

Suggested by Carlos Garriga and Devin Werner.



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