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A short history of working hours

The U.K. work week since the year 1260

The FRED graph above shows average weekly hours worked per worker in the United Kingdom since the year 1260.

Clearly, measuring the work week is a long-standing tradition for the British. It is also a long-standing challenge for economists, but accurate measures matter for at least two reasons: First, hours worked determine the time available for leisure and, thus, matter for welfare. Second, the measurement of productivity depends crucially on the measurement of hours worked.

Consider the Industrial Revolution in England, which is generally dated as the second half of the eighteenth century to the first half of the nineteenth century. Did this Industrial Revolution occur because of innovations and technological progress or because workers were working longer hours than before? The graph suggests that between 1750 and 1800, workers in the U.K. worked more than ever, indeed. So, innovations and technological progress may not be the only drivers of the Industrial Revolution.

The decline in hours worked in the U.K. since the first half of the nineteenth century is also remarkable and similar to what is observed in most of today’s developed economies. To get a sense of the importance of this decline, note that hours worked in 2016 are half what they were in 1830. We don’t show it here, but real gross domestic product per worker rose 12 times in the same time frame. Simply put, since 1830, U.K. workers are able to work half the time but produce 12 times as much.

History buffs out there may want to look a bit farther back at the steep decline in the fourteenth century, the time of the bubonic plague. For some dismal science on that period, check out this post.

How this graph was created: Simply search for and select “Average Weekly Hours Worked in the United Kingdom.”

Suggested by Guillaume Vandenbroucke.

The pandemic’s effect on inventories

Low production, steady demand in early 2020 depleted inventories

As the pandemic began in early spring of 2020, the U.S. economy faced significant supply disruptions: Many local and state governments mandated the shutdown of non-essential production of goods and services to various degrees.

Although production declined, American households still demanded goods as part of their daily lives. Income support from the federal government also bolstered the purchasing power of many households, and thus there was much less of a contraction in total demand than would have occurred otherwise.

So, where do the goods that are consumed in a given month, quarter, or year come from, if not from production? Here we focus on one channel: inventories—specifically, the change in inventories, also called inventory investment. This is the difference between production and sales over an interval in time. Inventory investment includes materials, works in progress, and finished goods.

Early in the pandemic, there was a tremendous drawdown of the nation’s inventories. The change in inventories (which is negative when inventories are falling) is one component of a nation’s investment, which in turn is one component of that nation’s gross domestic product. The change in inventories (seasonally adjusted annual rate) went from a modest –$20.6 billion in the first quarter of 2020 to –$289.9 billion in the following quarter. This was the all-time low for this measure. As is often the case as an economy recovers from a recession, the change in inventories bounced back quickly into positive territory in the third quarter of 2020.

How this graph was created: Search for and select the “change in private inventories” series from 1947 to the present. Adjust the time interval using the options available (the slider below the graph or the boxes in the upper right-hand corner) to zoom in on the pandemic period.

Suggested by Bill Dupor.

What’s common among cryptocurrencies?

Comparing crypto prices with data from Coinbase

FRED has listed the prices of certain cryptocurrencies for some time now. The FRED graph above shows four of them. Note that their prices are measured through an index number, normalized to 100 on 01-01-2018, so we can compare their growth, not their levels in actual dollars and cents.

Just eyeballing the graph reveals that they seem to largely move in unison, which is remarkable given that these prices are highly volatile. So, a significant component of their price variations must be common across all these cryptocurrencies. This commonality may come from news that pertains to all of them, such as regulation, adoption by some large player, or fiscal rulings, for example. Changes to the relative value of their counterpart, the U.S. dollar, can also play a role.

Obviously, there’s also a significant part of these price changes that is idiosyncratic to each cryptocurrency. After all, FRED’s source for these data, Coinbase, lists 5,329 different cryptocurrencies at the time of this writing; something must be differentiating them. They may have different protocols, different underlying assets (if any), different constraints on supply, and different purposes.

How this graph was created: Search for the Coinbase source in FRED, select all series, and click “Add to graph.” From the “Edit Graph” panel, change units to 100 for 2018-01-01.

Suggested by Christian Zimmermann.

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