Federal Reserve Economic Data

Uncertainty surrounding trade policy can significantly affect International trade flows. Our first FRED graph, above, displays an index of trade policy uncertainty and the percent change in imports. The spike in uncertainty starting in late 2024 coincides with the spike in imports, suggesting that US importers preemptively accelerated their purchases as a precaution against anticipated tariff hikes or other trade disruptions.

To dig a little deeper, we look to our second graph, which separates total US imports by their region of origin. US imports from most regions grew modestly, but imports from Europe (the red-orange dash-dot line) distinctly stand out: They expanded rapidly and significantly surpassed the growth of all other sources of US imports. What accounts for this European import surge?

Our third graph separates European imports to the US by individual country. Switzerland (the red dashed line) clearly emerges as the dominant contributor, significantly outpacing all other European nations. This surge in Swiss imports is predominantly driven by increased purchases of gold, shown by the solid red line. This targeted increase in gold imports likely reflects precautionary behavior by businesses and investors seeking a safe-haven asset amid heightened trade policy uncertainty. Of course, other factors such as portfolio diversification could also play a role.

The key takeaway here is that responses to trade policy uncertainty can vary significantly across sectors and trading partners. The recent increase in US imports amid rising trade policy uncertainty isn’t an across-the-board phenomenon, but seems largely driven by precautionary imports of gold from Switzerland.

How these graphs were created: First graph: Search FRED for and select “Imports of Goods: Balance of Payments Basis.” Click on “Edit Graph,” change the units to “Percent Change from Year Ago.” From the “Add Line” tab, search for “Economic Policy Uncertainty Index: Categorical Index: Trade policy,” click “Add data series,” and change the units to “Index”; in the “Format” tab, click “Customize” and change “Y-Axis position” to “Right.” Set the first date as 2024-04-01. Second graph: Search FRED for and select “U.S. Imports of Goods by Customs Basis” for China, World, Canada, Europe, and Asia. From “Edit Graph” panel, edit the line for Canada by using the “Customize data” field to search for and add “U.S. Imports of Goods by Customs Basis for Mexico.” Type the formula a+b and click “Apply.” Next, change the units to “Percent Change from Year Ago” and click on “Copy to all.” Set the first date as 2024-03-01. Third graph: Search FRED for and select “U.S. Imports of Goods by Customs Basis” for Germany, Europe, France, the United Kingdom, and Switzerland and then also “Imports of Goods: Nonmonetary gold.” Change the units to “Percent Change from Year Ago” and again click on “Copy to all” and use 2024-03-01.

Suggested by Fernando Leibovici.

The FRED Blog has discussed the economic impact of war on labor markets and energy prices. Today, we discuss the impact on the price of lard. Stay with us, here…

Our FRED graph above shows data from the NBER’s Macrohistory Database on the retail and wholesale prices of lard in New York between 1911 and 1943. There were very large price swings during that time, so let’s break it down:

• Between 1911 and early 1916, lard prices were stable in the range of $0.10 – $0.15 per pound, even though World War I began in 1914 and the US didn’t enter the conflict until almost three years later.
• Between mid-1916 and mid-1919, retail lard prices (solid dark blue line) rose by 156% and wholesale prices (dashed light blue line) rose by 168%. Increased foreign demand for food items, whose production was disrupted during the Great War, helps explain those price hikes.
• After 1920, prices dropped below pre-war levels once foreign supply expanded, vegetable-based consumer alternatives to lard became available, and the Great Depression began.

World War II broke out in 1939 and the U.S. joined the conflict at the end of 1941. But the price of lard  and many other agricultural products didn’t rise nearly as much as they did two decades earlier. Changes  in consumption patterns and international finance conditions and the experience gained during World War I in managing agricultural prices all contributed to this more muted inflationary response.

At the risk of larding this post, it’s thought-provoking to discuss the ratio between the retail and wholesale prices during this time. The retail price is always higher than the wholesale price, to account for retailer overhead cost (e.g., distribution and marketing expenses) and profit margins. But the price margin between retail and wholesale prices was at its lowest between 1916 and 1919, when prices were rising the fastest. This may reflect some difficulty in passing on the full amount of the price increases to consumers.

Read more about farm product prices during the world wars in this related article by J.M. Tinley in the American Journal of Agricultural Economics. For a deeper dive into the history of lard and a gruesome reference to Upton Sinclair’s The Jungle, check this episode of the Planet Money podcast.

How this graph was created: Search FRED for and select “Retail Price of Lard for New York, NY.” From the “Edit Graph” panel, use the “Add Line” tab to search for and select “Wholesale Price of Lard for New York, NY.”

Suggested by Diego Mendez-Carbajo.

Intellectual property products (IPP) such as software, patents, and original artwork have become a much larger share of the capital stock over time. Our FRED graph above shows that the IPP share of the current-cost capital stock rose from 5.6% in 1980 to 14.5% in 2023.

A unique feature of IPP is that it depreciates much faster than traditional capital. IPP isn’t usually subject to the physical depreciation from wear and tear that affects buildings, computers, and equipment. But it is subject to obsolescence from new technological innovations. A competitor’s innovation can quickly render a patent or algorithm irrelevant.

The Bureau of Economic Analysis (BEA) assumes that software, for example, depreciates at a rate of 33% per year, which is much faster than physical wear and tear.

Our second FRED graph above shows annual depreciation for equipment, structures, and IPP as a share of the current capital stock. Depreciation of structures (orange dashed line) and equipment (blue solid line) have remained stable over time, at around 3% and 13%, respectively. Depreciation of IPP (green dotted line) was 24% in 2023.

In short, this faster pace of growth and depreciation of IPP implies that more investment is necessary to maintain the current capital stock.

How these graphs were created: All these series are in millions of dollars, not seasonally adjusted. First graph: Search FRED for and select “Current-Cost Net Stock of Fixed Assets: Private: Intellectual property products.” Click “Edit Graph,” use “Customize data” to search for “Current-Cost Net Stock of Fixed Assets: Private: Nonresidential,” and click “Add.” Input the formula a/b and click “Apply.” Second graph: Search for and select “Current-Cost Depreciation of Fixed Assets: Private: Nonresidential: Equipment” and follow the same steps as above, dividing by “Current-Cost Net Stock of Fixed Assets: Private: Nonresidential: Equipment.” Use the “Add Line” tab to add the next two series and their divisors: “Current-Cost Depreciation of Fixed Assets: Private: Intellectual property products” / “Current-Cost Net Stock of Fixed Assets: Private: Intellectual property products” and “Current-Cost Depreciation of Fixed Assets: Private: Nonresidential: Structures” / “Current-Cost Net Stock of Fixed Assets: Private: Nonresidential: Structures.”

Suggested by Cassandra Marks and Hannah Rubinton.