Federal Reserve Economic Data

The FRED Blog has discussed long trends and unexpected changes in the labor market in relation to the COVID-19 pandemic. Today, we focus on a foreseeable change in labor market conditions: the reduction in the size of the labor force due to locked-down border crossings and constrained immigration.

The FRED graph above shows data from the US Bureau of Labor Statistics about the number of foreign-born employed persons. The data are available since January 2007, and we have added a customized dashed line (in red) to indicate the trend in those figures between 2009 and the time of this writing. After the Great Recession, the steady growth in the number of employed persons born outside of the US was dramatically interrupted by the COVID-19 pandemic. It took the better part of three years for that segment of the labor force to bounce back to its pre-pandemic trend of growth. Did the missing workers from immigration restrictions result in long-lasting tight labor market conditions?

Recent research from Hannah Rubinton and Cassie Marks at the St Louis Fed finds some evidence that the immigration restrictions are unlikely to be the underlying cause of continuing labor market tightness. That can be explained by the fact that the number of missing workers from constrained immigration is  relatively small compared with the size of the overall employed population. A similar conclusion is reached when examining the relationship between labor market tightness and missing workers across industries and states. Only in the case of the food services industry did immigration restrictions noticeably increase labor market tightness.

For more about this and other research, visit the website of the Research Division of the Federal Reserve Bank of St Louis, which offers an array of economic analysis and expertise provided by our staff.

How this graph wase created: Search FRED for and select “Employment Level – Foreign Born.” From the “Edit Graph” panel, use the “Add Line” tab to “Create a user-defined line.” Adjust the “Value start” to “20000.” Last, use the “Format” tab to change the style for “Line 2: User-defined Line” to “Dashed.”

Suggested by Diego Mendez-Carbajo.

[Note: in the few days between when this post was written and it was published, the BEA published a major revision that only includes data from 2017. Earlier data will be included later in the Fall. The earlier data can be found on ALFRED here: first and second graph.]

How large is the US legal sector? Excessive litigation and overeager solicitation of injury victims aren’t the norm in Western economies, but the level of advertising for legal services alone may give the impression the legal sector has grown by leaps and bounds. But this is circumstantial evidence, so we need data.

FRED can help us measure the legal sector with data from the Bureau of Economic Analysis. The BEA computes very detailed tables across all sectors of the economy, and the FRED graph above shows what the legal sector contributes to US GDP.

Exhibit A: With data under NAICS code 5411, the FRED graph above shows that from 1997 to 2021 the legal sector’s contribution to GDP roughly tripled.

Objection! Would this statement stand up in court?

Withdrawn. Of course it wouldn’t—because the US economy as a whole has increased as well, as has the general price level.

So, we adjust the graph by dividing the legal sector’s GDP by nominal GDP. Now, we can properly discuss the size of the legal sector, which is shown in the second FRED graph.

What’s striking is that the sector’s contribution isn’t stable at all. The share has indeed increased by a third over the first 11 years, from 1.2% to 1.6%, only to collapse back to 1.3% after the 2008 recession.

Clearly, the real estate industry and finance more generally have had a strong impact on legal activity. But is 1.3% all that much? Without a precedent to compare this number with, you will have to be the judge of that.

Unfortunately, the dataset does not go back far enough to see how the 1977 Supreme Court decision allowing advertising by lawyers may have changed the size of this sector. Also keep in mind that the statistics above do not take into account the public sector side of legal proceedings—that is, judges, their clerks, and other legal system support.

In witness whereof, the parties hereunto have set their hands to these presents as a deed on the day month and year hereinbefore mentioned and furthermore attest as to how these graphs were created: Search FRED for “lawyers GDP” and you have the first graph. To get the second one, click on “Edit Graph,” search for and select “GDP,” making sure not to select real GDP, and apply formula a/b/10 (times 100 to get percentages, divided by 1000 to adjust for the different units). As always, be sure to follow FRED’s terms of use.

Suggested by Christian Zimmermann.