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U.S. net exports of technology have fallen since 2011

How have tech imports and exports changed?

The FRED graph above shows the quarterly evolution of U.S. net exports of technology, from Q1 1967 to Q1 2021. Net exports of technology are measured as royalties and license fees received minus royalties and license fees paid during this period (as a percentage of GDP).

The U.S. has always been a net exporter of technology and, hence, a net receiver of royalty payments. And net exports as a share of GDP have steadily increased from 0.12% in Q1 1985 to 0.48% in Q3 2011—an increase of 300%! But after 2011, there’s been a slow decline, reaching 0.28% in Q1 2021 (its lowest level since Q1 2002). What’s caused this decline?

The FRED graph below shows, separately, exports of technology in terms of royalties received and imports of technology in terms of royalties paid (again, as a percentage of GDP). While U.S. technology exports have steadily fallen from 0.70% in Q3 2011 to 0.51% in Q1 2021, imports have remained fairly stable. Hence, the decline in net exports has been driven exclusively by a decline in exports.

The decline in royalties received by the U.S. throughout the 2010s could be attributed to two factors. First, the rise of Silicon Valley tech giants and their use of royalty payments to shift profits and avoid taxes by moving their intellectual property to tax havens. Second, the U.S.’s standing as the sole global technological power has been rapidly challenged by China over the past few decades. In fact, look for a blog post on that topic in the next week.

How these graphs were created: First graph: Search FRED for “Royalties” and select “Exports of services: Royalties and license fees.” From the “Edit Graph” panel’s “Edit Line 1” tab, use the customize data search box to search for and add “Imports of services: Royalties and license fees” and “Gross domestic product.” Then use the formula box below to type in ((a-b)/c)*100. Second graph: Search FRED for “Royalties” and select “Exports of services: Royalties and license fees.” From the “Edit Graph” panel’s “Add Line” tab, search for and add “Imports of services: Royalties and license fees.” Go to the “Edit Line” tab for each of these series and use the customize data search box to search for and add “Gross domestic product.” Then use the formula box below to type in (a/b)*100.

Suggested by Ana Maria Santacreu and Jesse LaBelle.

View on FRED, series used in this post: B684RC1Q027SBEA, B908RC1Q027SBEA, GDP

The health of labor markets post-pandemic: The supply perspective

As we discussed in the previous post, firms everywhere are having serious difficulties filling vacancies. With these worker shortages on everyone’s minds, let’s discuss how the pandemic has shaped the workforce.

The FRED graph above shows the fraction of people who participate in the labor force—that is, who either have a job or are actively looking for one—by age group. In previous recessions, only teenagers had significant declines in participation rates; clearly, most workers who lost their jobs kept looking for another. In 2020, however, participation rates declined across the board, with would-be workers leaving the labor force in the face of widespread shutdowns, health concerns, school closures, and financial support from the government.

That said, different age groups clearly reacted to the recent recession in different ways. Older workers’ participation rates declined through 2021—probably led by a wave of early retirees—but prime-age workers’ rates plateaued slightly below their pre-pandemic levels. It’s likely that some would-be workers remain out of the labor force because of lingering health concerns and childcare needs.

Now, what about teenagers today? The participation rate for 16- to 19-year-olds has increased beyond its pre-pandemic level. It’s possible some of this is related to historically low undergraduate enrollment, with high school graduates opting for work in the tight labor market over potentially remote learning.

How these graphs were created: Search for and select “Labor force participation rate – 16-19 Yrs.” From the “Edit Graph” panel, use the “Add line” tab to search for and add “Labor force participation rate – 20-24 Yrs.” Do the same for “Labor force participation rate – 25-54 Yrs.” And “Labor force participation rate – 55 Yrs. & Over.” Set the date range to mirror the dates shown in the blog post.

Suggested by Carlos Garriga and Devin Werner.

The health of labor markets post-pandemic: The demand perspective

Successful vaccines are bringing the pandemic effectively to an end. And, as economic activity resumes, firms everywhere appear to be having serious difficulties hiring: The news is filled with middling labor market reports, alarming anecdotes, and long restaurant wait times.

The FRED graph above quantifies this shift by depicting, across industries, the number of job openings at the end of each month. It’s very clear that across the board this number has jumped significantly, especially in the past few months.

Such a jump is a very positive development for the U.S. economy. The number of job openings at any given time is affected by both how difficult it is for firms to fill openings and how many openings firms offer in the first place. Insofar as the recent increase is caused by firms expanding, it’s clear that firms are expecting future business growth. Consult the graph to compare the recent jumps to the much lower number of job openings after the Great Recession and its lengthy “jobless recovery.”

The industry-level numbers are noteworthy: The leisure and hospitality industry, frequently the focus of news stories about worker shortages, has had the largest increase in job openings. But the other industries aren’t far behind, despite being significantly less impacted by the pandemic, as data from the same data release show. While leisure and hospitality lost over 3 million jobs in 2020, the others lost less than a million. Chalk that up to the pandemic’s lopsided impact on these various industries.

Stay tuned for part 2 of this post: “The health of labor markets post-pandemic: The supply perspective.”

How these graphs were created: First graph: Search for and select “Job openings: Health care and social assistance.” From the “Edit Graph” panel, use the “Add line” tab to search for and add “Job openings: Leisure and Hospitality.” Do the same for “Job Openings: Manufacturing” and “Job Openings: Trade, Transportation, and Utilities.” Adjust the date range to mirror the dates shown in the blog post. Second graph: Search for and select “Hires: Health Care and Social Assistance.” From the “Edit Graph” panel, use the “Edit Line” tab to modify frequency to be annual with “Aggregation method” set to “Sum”; then add “Total Separations: Health Care and Social Assistance” under “Customize data” and set “Formula” to “a-b.” Do the same for the other industries (“Leisure and Hospitality,” “Manufacturing,” and “Trade, Transportation, and Utilities”), adding hires for each using the “Add line” tab and then repeating the steps above. Finally, go to the “Format” tab and set “Graph type” to “Bar” and set the date range to mirror the dates shown in the blog post.

Suggested by Carlos Garriga and Devin Werner.



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