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Declining spending on residential phone service

Cutting the cord by going mobile

The FRED Blog has compared mobile cellular subscriptions across countries, highlighting the rapid adoption of that communication technology in some developing economies. Here, we revisit the idea of “going mobile” by comparing it with its counterpart of “cutting the cord” (i.e., landline phone service).

The FRED graph above shows data from the Consumer Expenditure Survey conducted by the U.S. Bureau of Labor Statistics. The purple area represents consumer spending on cellular phone services as a percentage of total consumer spending on telephone services. The green area represents the percentage of spending on residential landline phone service, voice over internet protocol (VOIP), and phone cards.

The available data show a gradual change in spending patterns from landline phone service toward mobile phone service between 2013 and 2020. The longer-running trend of “cutting the cord on landlines” is described by Brett Creech.

Speaking of phone lines… Did you know that FRED was launched 31 years ago as a free electronic bulletin board of economic data that users could access via modems connected to personal computers through phone landlines? By 1995, FRED was on the world wide web and anybody could access it through the internet.

How this graph was created: Search for and select “Expenditures: Residential Phone Service, VOIP, and Phone Cards: All Consumer Units.” From the “Edit Graph” panel, use the “Add Line” tab to search for and select “Expenditures: Cellular Phone Service: All Consumer Units.” Next, from the “Format” panel, select “Graph type: Area” and “Stacking: Percent.”

Suggested by Diego Mendez-Carbajo.

New vehicle sales and auto price inflation since the pandemic

The FRED graph above plots two monthly U.S. data series from February 2019 through February 2022: monthly total new vehicle sales and the consumer price index for new vehicles. The numbers on the left vertical axis go from 0 to 180: The vehicle sales series stays in a broad neighborhood of 20 (which reflects 20 million units), whereas the price index stays in a range of 140 to 170. Because of the difference in values, this leaves a lot of white space in the middle of the graph. To better read the data, one can improve the graph by using different vertical axes for the two series.

The FRED graph below shows the same data with different axes for each series: right axis for the sales and left axis for the price index. Notice how much easier it is to understand the price and quantity dynamics for such a simple adjustment of the graph.

Before the pandemic, auto sales were about 17.3 units million per month. At the start of the pandemic in spring 2020, vehicles sales immediately declined as many workers were laid off and consumers likely delayed large expenditures in light of uncertain economic times. By the spring of 2021, auto sales had recovered and surpassed its pre-pandemic level.

The next major change began soon after: Vehicle sales experienced a dramatic drop, driven largely by two factors. First, supply constraints due to production slowdowns early in the pandemic and shortages of inputs, including computer microchips, restricted the number of vehicles that were made available to consumers. Second, the spike in the spring of 2021 left dealer inventories low.

Auto sales have yo-yoed over the past two years, but auto prices have not. The blue line plots the consumer price index for vehicles over the same period. Note that this is a price index; the numerical value of the index should not be interpreted as the average dollar price of a car. By construction, the index is set equal to 100 for 1982. Changes in this price index over an interval of time can be read as the amount of inflation in auto prices.

Over the first twelve months since the start of the pandemic, the new vehicle price index rose about 1 percent. More recently (i.e., between March 2021 and February 2022), this price index rose about 13 percent. This upward price pressure is manifested by strong demand and limiting supply factors described above.

How these graphs were created: Search for and select “Consumer Price Index for All Urban Consumers: New Vehicles in U.S. City Average.” (Searching for some suitable subset of these words also works.) From the “Edit Graph” panel, use the “Add Line” tab to search for and select the “total vehicle sales” series. To focus on recent years, use the slider at the bottom of the graph or the YYY-MM-DD date box in the upper right side to start the series in 2019 or so. Use this first graph to create the second: From the “Edit Graph” panel, use the “Format” tab to change one of the lines’ “Y-axis position” to the right.

Suggested by Bill Dupor.

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