Federal Reserve Economic Data

There’s little doubt the cost of housing has been increasing for a long time, whether you own or rent. Which cost has increased more? The FRED graph above seems to indicate that there has been little difference between these two growth rates for about four decades. But let’s deconstruct this graph to understand it a little better.

First, the two series are indexed to have a value of 100 in 1982. This means that it’s useless to compare their levels. That is, we cannot tell whether renting or owning is more affordable. We can only compare how the costs have evolved since 1982, and it’s quite apparent that they track each other quite well.

Second, the CPI series for rents is collected less frequently than other CPI series, meaning that its fluctuations in the data may show a delayed reality. That doesn’t matter much here, as we’re looking at long-term trends. And this applies also to the other series depicted here.

Third, the CPI series for house ownership requires quite a few explanations. Here, the Bureau of Labor Statistics makes an attempt to calculate the “true” cost of ownership, not the cost of buying a home, which is considered an investment, as are home improvements and mortgage interest. The idea is to figure out how much an owner-occupied home would rent for, not including utilities. This measure is based on reports from owners that are adjusted based on the housing stock compositions and comparisons with similar rental properties. The details are complex and explained here. In other words, this series is only loosely related to house prices.

How this graph was created: Search FRED for and select “CPI rent.” From the “Edit Graph” panel, use the “Add Line” tab to search for “CPI rent” again and select the other series.

Suggested by Christian Zimmermann.

Much like the James Webb space telescope, the FRED Blog is here to open windows of discovery into the data-verse of FRED. Many posts have focused on the economics of innovation, from the distribution of patents across U.S. states and countries to incentives to conduct research into new products and ideas.

A recent St. Louis Fed podcast shines some light on how the FRED team itself innovates to enhance the experiences of FRED data users. Listen to the podcast to hear our colleagues explain their favorite FRED data scenarios, and read these FRED Blog posts to learn more about the data they describe:

• 100 years of industrial production data
• Daily recession dates in FRED: Three choices to date business cycle turning points
• The many flavors of inflation
• The data behind the fear of yield curve inversions

Suggested by Diego Mendez-Carbajo.

Since the start of the pandemic, the word “uncertainty” has dominated conversations about the U.S. economic outlook. It wasn’t clear how the novel coronavirus would affect the economy, and it wasn’t clear what policies would be necessary to counteract its effects. More recently, supply chain issues, the Russian invasion of Ukraine, and a fiscal-stimulus-driven rise in consumer demand have propelled inflation well beyond what many expected last year. And there’s substantial uncertainty about the Federal Reserve’s ability to bring this inflation back under control in a timely fashion.

Quantifying policy uncertainty, however, is tricky. Fortunately, we have the Baker-Bloom-Davis (BBD) Economic Policy Uncertainty Index and its sub-index that specifically targets uncertainty associated with monetary policy.

The FRED graph above plots both indexes from January 2020 to the latest available data point: the BBD Economic Policy Uncertainty Index for the United States (in blue, overall uncertainty) and the Categorical Index for Monetary Policy (in red, specifically monetary policy). A higher index value indicates higher policy uncertainty.

As expected, both indexes jumped in March 2020 as a reaction to the pandemic. As policies were enacted, policy uncertainty broadly declined, especially for monetary policy. But as inflation started to pick up in 2021, monetary policy uncertainty rose and has been moving closely with the overall policy uncertainty index, suggesting that uncertainty around monetary policy, vis-à-vis historically high inflation, has been the dominant force behind overall economic policy uncertainty.

How to create this graph: Search for “Economic Policy Uncertainty Index for United States”: It’s likely your first result is the series you want. Click on the “1 other format” dropdown and choose “Monthly, Index, Not Seasonally Adjusted.” From the orange “Edit Graph” panel, navigate to the “Add Line” tab, search for “Economic Policy Uncertainty Index: Categorical Index: Monetary Policy,” and click “Add data series.” Modify that index’s frequency to monthly in the “Edit Lines” tab if necessary.

Suggested by Michael McCracken and Trần Khánh Ngân.