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Egg and poultry price inflation

Why did the chicken cross the road? To get a better deal on the high price of eggs

Egg prices are absolutely soaring, while chicken meat prices have been well-grounded. What gives?

Team FRED Blog never wants to sound like Chicken Little, but we also don’t want to walk on eggshells. So, first, let’s simply look at the data: The FRED graph above shows that the average price of whole fresh chickens (in brown) rose 13% between January and December 2022 while the average price of eggs (in yellow) rose 120%. That’s 10 times faster!

Now let’s combine these data with some reporting from the US Department of Agriculture: During 2022, repeated outbreaks of avian influenza ravaged farm flocks of egg-laying hens, thereby drastically reducing the supply of eggs, which drove their prices to record highs. But the price of chicken meat has not experienced the same degree of inflation. Why?

Well, farmers don’t have all their chickens in one basket. Chickens raised for meat (a.k.a. “broilers”) have been less exposed and therefore less susceptible to the avian influenza that has decimated the egg-laying hens, and the supply of broilers has been reduced less than 1/10 of 1%. Because these two separate supplies of chickens have not been equally affected, neither have their prices. And, despite the regional concentration of losses to poultry populations, the average price of eggs remained remarkably similar across US regions.

If you want to avoid getting egg on your face and, instead, rule the data roost, read on for an explanation of how we chose to present this graph: We started with the monthly data from the Bureau of Labor Statistics (the good eggs who bring you the CPI), but we transformed the units of the data from dollars and cents to an index with a customized base period of January 2022. This transformation really helps illuminate the differences between the two series that have occurred since January 2022.

How this graph was created: Search FRED for “Average Price: Chicken, Fresh, Whole.” Next, click the “Edit Graph” button and use the “Add Line” tab to add “Average Price: Eggs, Grade A, Large.” Last, change the units to “Index (Scale value to 100 for chosen date),” enter “2020-01-01,“ and click on “Copy to all.”

Suggested by George Fortier and Diego Mendez-Carbajo.

Cycles in lending standards

Data from the senior loan officer opinion survey

FRED recently added more data from the Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS). The survey, conducted by the Board of Governors, is currently sent to 124 domestic banks and US branches and agencies of foreign banks. The senior loan officers at those organizations answer a series of questions about their opinions on current lending practices. This qualitative information is used by monetary policymakers to gauge credit market and banking conditions.

The FRED graph above shows the fraction of domestic banks that reported having tightened their lending standards minus the fraction of banks that reported having eased their lending standards on commercial loans to small firms and to large and middle-market firms. The graph shows data collected from all the surveyed domestic banks and those with large amounts of capital. When the data series is above the zero line, the majority of the surveyed banks are restricting lending; when it is below the zero line, the majority of the surveyed banks are easing lending.

The data show easier lending conditions during economic expansions, which are the time periods between contractions in economic activity (known as recessions, which shaded areas in the FRED graph). The data also show markedly tighter lending standards ahead of and during recessions. Why do loan officers’ perceptions about banking conditions change with the phases of the business cycle?

Research by Chen, Higgings, and Zha studied the relationship between perceived lending standards and uncertainty about the macroeconomic outlook: Uncertainty during recessions makes lending riskier and makes lenders more cautious. Earlier research by Maximiliano Dvorkin and Hannah Shell tapped into the SLOOS data to document the relationship between lending and borrowing perceptions and changes in actual bank lending during the 2001 and the 2007-2009 recessions, showing a direct correlation between opinions and actual loan growth.

How this graph was created: Search FRED for “Net Percentage of Domestic Banks Tightening Standards for Commercial and Industrial Loans to Large and Middle-Market Firms.” Next, click the “Edit Graph” button and use the “Add Line” tab to add “Net Percentage of Domestic Banks Tightening Standards for Commercial and Industrial Loans to Small Firms.” Repeat the last step to add the similarly named data series from large domestic banks.

Suggested by Diego Mendez-Carbajo.

Different patterns in the recovery of the self-employed

The COVID-19 pandemic prompted workers to reconsider their professional lives and consider different types of employment. Self-employment, which is a vital source of jobs in the US, followed a different pattern of recovery than total employment during and after the COVID-19 pandemic.

The self-employed make up between 10% and 11% of the 157 million employed workers in the United States. The Bureau of Labor Statistics (BLS) defines the self-employed as those working for profit or fees in their own business and distinguishes between incorporated and unincorporated self-employment. The incorporated self-employed, as you might expect, legally incorporated their businesses, gaining tax incentives and personal asset protection. The BLS typically excludes them from analysis of self-employment because they’re considered employees of their own corporations.

The FRED graph above shows self-employment levels for both the incorporated (blue) and unincorporated (red), as well as total employment (green). The series are indexed to 100 in February 2020, right before the COVID-19 pandemic.

The incorporated and unincorporated self-employed have taken different paths over the past three years. The level of unincorporated self-employment has closely followed that of total employment and declined drastically in March and April 2020. But the level of incorporated self-employment changed little throughout this period. Unincorporated self-employment steadily recovered to pre-pandemic levels from April 2020 to July 2021, but incorporated self-employment declined more gradually to its trough in February 2021 before it began to recover.

There could be a few reasons why these groups look so different. The incorporated may have accepted PPP loans at a higher rate than the unincorporated if they were more attuned and accustomed to navigating government rules and regulations. Their businesses also tend to be more developed, potentially with more capital to keep themselves afloat. Their dip may have come later in the pandemic, after the relief dried up and the end-of-2020 COVID wave arrived.

Now, as both forms of self-employment rise above pre-pandemic levels, it’s unclear whether the trends in incorporated and unincorporated self-employment will once again diverge.

How this graph was created: Search FRED for “Employment Level Total Wage and Salary, Incorporated Self Employed.” Next, click the “Edit Graph” button and use the “Add Line” tab to add “Employment Level All Industries Self-Employed, Unincorporated.” Then, select “Add Line” once more and search for “Employment Level.” Click “Edit Line 1” and change “Units” to “Index: Scale value to 100 for chosen date.” Next, select “2020-02-01 Start” to the right of “U.S. Recession” as the date to equal 100 for your custom index and “Copy to all.” Finally, adjust the date range to begin at “2020-01-01.”

Suggested by Victoria Gregory and Elisabeth Harding.



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