Federal Reserve Economic Data

What do conditions look like for business owners? It’s a complicated question. On the pessimistic side, inflation remains elevated and supply chains are still working their way back to pre-pandemic levels (though both have seen improvement in recent months). Labor markets are historically tight, and interest rate increases over the previous year have raised borrowing costs. Add that to broader uncertainty about the near-term economic outlook, and it’s easy to see why the NFIB’s Small Business Optimism Index has been below its 49-year average for 17 consecutive months.

Yet more people than ever are starting businesses in this environment, according to the Census Bureau’s Business Formation Statistics. Tracked since 2006, these data show the number of applications for an Employer Identification Number (EIN), which is a unique federal tax identifier linked to wage-paying businesses. (Sole proprietorships with no employees often don’t have an EIN.) In this dataset, the Census Bureau categorizes some business applications as “high propensity,” which have a high rate of leading to a business with a payroll. Manufacturing, retail, healthcare, and food service all fall under this category.

Applications for all businesses rose from a seasonally adjusted average of 200k per month to just over 300k per month during the 2010s. For the past two years, they’ve held steady at over 400k per month. High-propensity applications have seen a similar increase: After staying below 100k per month for the 2010s, they’ve been above 130k for the past two years.

It’s likely these increases reflect shifting economic conditions in the wake of the COVID-19 pandemic, and additional research could help us better understand how and why they’re occurring. For now, it’s enough to know that some business owners feel that conditions are tough, while others are taking this moment to launch new businesses.

How this graph was created: Search FRED for “Business Applications: Total for all NAICS.” Use the “Add Line” option to and search for and select “High-Propensity Business Applications: Total for all NAICS.”

Suggested by Nathan Jefferson.

Last week’s FRED Blog post looked at the rising mortgage burden for US households: It discussed how recent increases in interest rates and outstanding mortgage loan balances offset growth in disposable income. A larger financial burden of paying back new mortgage loans is likely to decrease housing demand and, other things being equal, lower housing prices.

The FRED graph above shows the percent change from a year ago in three different, yet related, home price indexes. We highlight the past decade of available data because, for almost all that time, the monthly S&P/Case-Shiller US national home price index (the red line) grew year over year. Only in April 2023 did home prices decrease relative to the previous year. However, relative to the previous month, the price index increased. You can see for yourself in this FRED graph of index levels and month-over-moth percent growth rates.

So, are home prices decreasing? The answer depends on whether you choose a monthly or an annual base for calculating their growth. Keep in mind that the index recorded its all-time high in June 2022 and that the data are not seasonally adjusted. It is difficult to eyeball data trends under those conditions.

The two alternative measures of home prices shown in the FRED graph above may help you add some context to the data. Both the quarterly all-transactions house price index (the green line), produced by the US Federal Housing Finance Agency, and the monthly Zillow home value index for all homes (the blue line), produced by Zillow.com, show a steady slowdown in their year-over-year growth. However, at the time of this writing, neither marks a decrease in home prices from a year ago.

Bookmark this FRED graph and visit it next month to be the first one to know about home price growth when the graph updates with the latest available data.

Learn more about… housing price trends and how these price indexes are constructed.

How this graph was created: Search FRED for and select “Zillow Home Value Index (ZHVI) for All Homes Including Single-Family Residences, Condos, and CO-OPs in the United States of America.” From the “Edit Graph” panel, use the “Add Line” tab to search for and select “S&P/Case-Shiller U.S. National Home Price Index” and “All-Transactions House Price Index for the United States.” Last, select “Line 1” and change the units to “Percent change from year ago.” Click on “Copy to all” to apply the change to the other two series.

Suggested by Diego Mendez-Carbajo.

The FRED Blog has discussed the relationship between single-family housing starts and completions and also how changes in overall housing market prices are measured. Today we build on the topic of housing by comparing trends in the type of residential constructions erected.

The FRED graph above shows data from the US Census and the US Department of Housing and Urban Development (HUD) on the number of new, privately owned, completed housing units since 1968. There are three size types: single-family buildings (the blue area), buildings with 2 to 4 separate dwellings (the red area), and buildings with 5 or more dwellings (the green area).

The data are shown in a stacked area graph to highlight the relative amounts of each type of housing structure. We also changed the data frequency from monthly to annual to observe the trends more easily. So, what does the graph show?

The number of single-family structures, as a proportion of all types of housing structures, is clearly larger than the number of multifamily structures. This might reflect a preference for single-family housing, but we can’t say for sure because the data do not capture the exact number of individual dwellings in large multi-unit housing.

However, the data do show a trend in the construction of multifamily buildings with 2 to 4 units. That housing trend even has a name: the “missing middle.”

The term was coined to reflect the fact that construction of small-scale and affordable multifamily dwellings has decreased over time. “Middle” housing surged in the early 1970s during a boom in the overall construction of multifamily housing. During this period, nearly half of all new homes were multifamily. This type of housing became relatively less and less popular—as revealed by the shrinking red area in the graph.

Recent research coauthored by Raphael Bostic from the Atlanta Fed notes that small and medium multifamily properties, defined as buildings with 2 to 49 units, comprise over 20% of the US housing stock. This housing segment contains the largest percentage of the lowest-income households and the majority of rental units across the country. You can learn more about this topic here.

How this graph was created: Search the alphabetical list of FRED releases for “New Residential Construction” and select “Table 5. New Privately-Owned Housing Units Completed.” Select the three series naming the number of units per structure and click “Add to Graph.” Use the “Format” tab to change the graph type to “Area” and the stacking option to “Percent.”

Suggested by Zach Wallace-Wright and Diego Mendez-Carbajo.