Federal Reserve Economic Data

“It’s one banana, Michael. What could it cost? $10?”

Randall Munroe’s xkcd webcomic recently referenced FRED in a wonderful infographic that responds to the above question from the “Arrested Development” sitcom. Basically, an oblivious wealthy character reveals they have no clue how much things cost.

The infographic starts with FRED price data to make some projections about how far into the future you’d need to go for a banana to actually cost $10. And when art imitates (FRED) life, the FRED Blog notices!

So we respond to this same question with the help of FRED’s friend ALFRED,* constructing a graph of banana prices that uses data series from the BLS and the FOMC: the annual average price of bananas between 1980 and 2023 (blue line) and the projected annual value of the PCE price index for 2023 to 2026 (red line). The custom dotted vertical line marks the end of the historical record and the start of the estimated projections.

The graph stops at 2026, the last value at the time of this writing of current FOMC projections. The price data go from 8.5 cents in 1980 to 15.7 cents in 2023 and are projected to reach 16.2 cents in 2026. At a PCE price index inflation rate of 2% (the FOMC’s inflation target), it will take 210 years for a banana to reach a price of $10.

How this graph was created: In ALFRED, search for and select “Average Price Bananas.” From the “Edit Graph” panel, use the “Edit Line 1” tab to enter the formula a/4 to customize the units from dollars per pound to dollars per banana. We used data from the US Department of Agriculture to calculate how many bananas, on average, make a pound: 1 Lb. = 453.6 grams; 453.6 grams per pound divided by 115 grams per banana is approximately 4. Use the “Add Line” tab to search for and add “FOMC Summary of Economic Projections for the Personal Consumption Expenditures Inflation Rate, Central Tendency, Midpoint.” Type the formula (0.637/4)*(1+(a/100)) to calculate the future price of a banana, matching the median projected value of inflation estimated by the FOMC. The projected 2023 price doesn’t align with the average 2023 price reported by the BLS because the projected price is calculated as the reported 2022 average price ($0.637) inflated by the projected 2023 growth in the PCE (2.8%).

* We use ALFRED here because it’s static in time, while FRED updates with the newest data. When the next summary of economic projections is released by the FOMC, an updated FRED graph in this post would create a cognitive dissonance with the post’s static text.

Suggested by Diego Mendez-Carbajo.

Recent research has connected fiscal policy during the pandemic with subsequent inflation. One common piece of evidence is the close relationship between “excess savings” and inflation in recent years. Some of our friends around the Fed discuss this in more detail: Fernando Martin, Hamza Abdelrahman and Luiz E. Oliveira, and Omar Barbiero and Dhiren Patki.

These studies calculate the level of excess savings by adding up all the savings during the pandemic that deviate from the pre-pandemic trend. Here, we use an alternative measure of household savings that also considers changes in asset valuation and leverage: specifically, the difference between household total assets and total liabilities, known as household net worth. FRED gets the relevant data from the US financial accounts published by the Board of Governors of the Federal Reserve System.

One advantage of using household net worth is that it considers the value of housing wealth, or home equity. This component of household wealth is crucial—and maybe even more so in this period because of the significant increase in house prices, which implies a considerable increase in housing wealth.

The FRED graph above shows the evolution of household net worth (divided by the level of disposable personal income to represent its relative size) and the annualized quarter-to-quarter PCE inflation rate.

Our graph confirms the close connection between household savings and inflation during this period and shows that, in the third quarter of 2023, household wealth remained above pre-pandemic levels.

How this graph was created: Search FRED for and select the “household net worth” series. From the “Edit Graph” section, use the “Edit Line 1” tab to search for and add the “disposable personal income” series. Apply formula 100*(a/(b*1000)) and click “Apply.” For the second line, open the “Add Line” tab, search for and select “PCE Index” and apply formula 100*((1+a/100)^4-1). (For consistency, we multiply disposable personal income by 1000, we annualize the quarter-to-quarter percent change in PCE, and we multiply both indicators by 100 to display them in percent.) Finally, use the “Format” tab to move the y-axis for the first line to the right side and start the sample period in 2016.

Suggested by Masataka Mori and Juan M. Sánchez.

A year ago, the FRED Blog discussed how multiple outbreaks of avian influenza resulted in soaring egg prices. Today we fly back to the coop to discuss how egg prices have decreased since then.

The FRED graph above shows monthly average prices for eggs (in orange) and whole fresh chickens (in brown) reported by the US Bureau of Labor Statistics (BLS). We customized the units into percent changes from a year ago to best visualize price inflation: During months of rising prices, the graph bars rise above the zero line (this is called price inflation); during months of decreasing prices, the graph bars dip below the zero line (this is called price deflation).

Note that while egg prices registered deflation between May and December 2023, fresh chicken prices moderated their growth but did not actually decrease. Slower inflation is called disinflation.

Visit the website of the Economic Research Service of the US Department of Agriculture to learn more about how changes in food prices impact the cost of preparing meals, like this delicious infographic about the cost of apple pie ingredients… including eggs.

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.” Next, change the units to “Percent change from year ago” and click on “Copy to all.” Last, use the “Format” tab to change the graph type to “Bar.”

Suggested by Dieggo Mendez-Carbajo.