Federal Reserve Economic Data

In the United States, we typically pay for goods with U.S. dollars. Hence, the consumer price index (CPI) looks at a basket of goods priced in U.S. dollars. But what if the CPI were priced in Bitcoin? The FRED graph above shows the inflation rates for this basket of goods in U.S. dollars (blue line) and in Bitcoin (red line).

Even our currently high inflation rate in U.S. dollars is dwarfed by the towering peaks of the inflation rate in Bitcoin—not to mention Bitcoin’s wild gyrations. Never in the history of the U.S. dollar has the inflation rate reached the heights that Bitcoin has on several occasions in a few years.

Bitcoin also exhibits severe deflations. That’s problematic for a currency used for transactions: With deflation, consumers expect goods to become less expensive and thus wait to buy, which can lead to a collapse of the economy. Given that the dollar has been available (and not deflating), there was no economic collapse. To be clear: Bitcoin is used very little for transactions anyway, maybe because of these repeated deflations.

To continue being clear: The U.S. dollar also has had deflationary episodes, although not as severe. Our second graph is the same as our first graph but with the addition of a few other price indexes starting in 1850. You can see several episodes of deflation. (Use the sliders below the graph to exclude the Bitcoin years for better visibility.) Each of those deflationary episodes is associated with a recession, noted by the gray shading.

Notable dollar deflations haven’t happened for a long time. Why not? All the significant deflations happened during a period where the supply of U.S. dollars was tied to the quantity of gold: in other words, when the U.S. economy was on the gold standard. With no means to manage the supply of dollars, there was no way to avoid fluctuations in price when the demand for money fluctuated. After the Federal Reserve was created in 1913, it was at least possible to alleviate regional variations in money demand by shuttling cash across the nation, but the total quantity of money was set.

Bitcoin is similar in that it also has a more-or-less fixed quantity that cannot respond to fluctuations in demand. Thus, its price is bound to fluctuate more than the U.S. dollar, the supply of which the Federal Reserve can manage to avoid high inflation, deflation, and inflation volatility.

How these graphs were created: First graph: Search FRED for “CPI” but don’t click on the first choice. Seek out the series that covers from 1913 to today, which is not seasonally adjusted (as the other series are). From the “Edit Graph” panel, use the “Add Line” tab to search for the same CPI series. Then add a series to the second line by searching for “Bitcoin.” Apply formula a/b and at the bottom of the form choose the units “Percent change from previous year.” Finally, limit the visible years to those that have Bitcoin data. Second graph: Add new lines by searching for “general price level” and “index of wholesale prices.” Make sure they’re also expressed as percent changes and expand the window to include all years.

Suggested by Christian Zimmermann.

In early May 2022, the FRED Blog described the Macro Snapshot—an interactive dashboard of important economic indicators available in FRED that St. Louis Fed economists and policymakers follow when analyzing the economy. As the economy changes, of course, the indicators worth following also change.

The Macro Snapshot was discontinued in 2024, but this post looks at previous updates to the Macro Snapshot and includes current data in FRED.

Some tabs were added or reordered to emphasize recent economic events and improve user experience.

• Global prices for oil and other commodities, recently pushed up by Russia’s invasion of Ukraine and China’s frequent COVID lockdowns, can now be found in the “International” tab.
• Consumers’ year-ahead inflation expectations, increasing in the face of persistent inflation, are now included in the “Inflation” tab.
• Mortgage rates, rising alongside inflation expectations and the fed funds rate, are now in the “Financial Markets” tab.

The graph above is what appears in the Macro Snapshot itself, with some annotations:

1. Users can still set a custom time range and remove series using the legend.
2. But now each graph can be downloaded as an image, with a menu of choices for the type of image.

Such changes carry over to the downloaded image. The graph below shows how it looks when downloaded, with more annotations:

1. Interactive elements—such as the time range button, series that were “clicked off” via the legend, and the export menu itself—are removed.
2. Captions are optimized for a static image.
3. A watermark in the top right corner reminds you where you got the graph!

Suggested by Charles Gascon and Devin Werner.

Here at the FRED Blog, we celebrate every 100th post with a nod to that number. Today is our 800th, which turned out to be a challenge. We searched for “800” on FRED and found exactly one hit, which needs some explanation.

The FRED graph above shows data for the “800 concerns”: These “concerns” were a group of manufacturing businesses that varied in number from 261 to 793, yet somehow became known as the 800. The data come from the NBER Macrohistory Database, a patchwork of economic indicators that were collected for no more than a few decades, often by the NBER itself. This particular series was assembled and published by Geoffrey Moore for the NBER.

These data depict a diffusion index, which is a form of survey that asks a group whether something is going to increase, stay the same, or decrease. In this case, these manufacturing concerns were asked about their sales, specifically the change in sales compared with four quarters ago.

When the group, overall, expects conditions to stay the same, the diffusion index is at 50%. Higher values indicate more increases, and lower values indicate more decreases. This index shows continuous optimism among the manufacturers: Even during the two short recessions of the 1950s and the Korean War, more manufacturers saw sales increases than decreases.

These diffusion indexes are precursors to much more comprehensive business surveys that would later be conducted by various federal agencies. Many are available in FRED. The “800 concerns” was collected for less than a decade, with obvious interruptions.

How this graph was created: Search FRED for “800.”

Suggested by Christian Zimmermann.