Federal Reserve Economic Data

In the most recent FOMC press conference, on June 12, Chair Powell noted that the labor market “has come into better balance, with continued strong job gains and a low unemployment rate.”

One measure of labor market tightness that illustrates this is the job openings-to-unemployment ratio, shown in the FRED graph above. The ratio is taken by dividing the total number of job openings (from the BLS’s Job Openings and Labor Turnover Survey) by the total number of unemployed persons. The result is a statistic of the number of job openings for every unemployed person. This roughly reflects how high employers’ demand is for additional workers relative to the pool of people actively seeking work.

The ratio has clearly come down from its March 2022 peak of 2 job openings per unemployed person. At that time, employers were pining for workers as pent-up consumer demand strained supply chains and contributed to higher prices. But now the ratio is the same as its 2019 average of 1.2. This normalization is partly a result of vacancies being filled by new workers entering the labor force. It is also partly a result of vacancies being eliminated by employers before they’re filled, given the pressure from high borrowing costs and slowing consumer demand.

A few points are also worth noting.

First: Although the ratio of openings to unemployment is the same as in 2019, the ratio’s composition is different. As of May 2024, the number of job openings is higher than its 2019 average—and not only because of population growth. When adjusted for the total demand for workers, there are still more job openings available as shown by the job openings rate.

The current unemployment level is also higher than its 2019 average but so is the unemployment rate. The net effects of relatively more job openings and relatively more unemployed persons essentially cancel each other out, causing the ratio to be the same as it was in 2019.

Second: Based on this measure, labor markets are still tight, much like they were in 2019—a year many economists consider to have been abnormally “hot.” In the 10 years prior, steady payroll growth had cut the unemployment rate to a historic low of 3.7% and job openings almost tripled. Together, these changes lifted the 2019 ratio much higher than the ratio immediately after the 2008 recession or at any other point in the history of the data series. While the unemployment level is now slightly higher than it was several years ago, the recent labor market hasn’t been weak by any historical comparison.

More to consider: The openings-to-unemployment ratio has fallen substantially since January of this year, and job prospects for the unemployed could be reduced further as the economy continues to normalize. This is already playing out as suggested by data on job postings from Indeed.com, which are more recent than the available JOLTS data. (Read more about comparing JOLTS and Indeed data in FRED Blog posts from August and November.)

Also, the labor force may not be able to sustain the growth it has exhibited over the post-pandemic recovery. In fact, it seems to have stalled in recent months. So, as long as employer demand for workers continues to be strong, slowing labor force growth could reduce the competition that job seekers face. If so, the openings-to-unemployment ratio may begin to stabilize around its current level.

How this graph was created: In FRED, search for and select “Job Openings: Total Nonfarm.” From the “Edit Graph” panel, use the “Customize Data” section in the “Edit Line 1” tab to search and select “Unemployment Level.” You should see two series on the “Edit Line 1” tab listed as (a) and (b). In the “Customize Data” section, enter and apply a/b in the formula bar.

Suggested by Charles Gascon and Joseph Martorana.

The FRED Blog has discussed the very large share of employment and the very large share of consumer spending devoted to services. Today, we put this topic in a broader context by highlighting recent research from Ricardo Marto at the St. Louis Fed.

The FRED graph above shows BEA data indicating that, during the first quarter of 2024, the value of all services delivered by private businesses amounted to more than two-thirds of overall US economic activity.

Marto shows that the services sector also accounts for more than two-thirds of economic activity in most advanced economies and that similarly high proportions of total employment, hours worked, private firms in business, and household spending are connected to the delivery of services. He points to rising incomes and decreasing costs for producing goods as the reasons behind the growing share of the services sector in the overall economy.

For more about this and other research, visit the website of the Research Division of the Federal Reserve Bank of St Louis, which offers an array of economic analysis and expertise provided by our staff.

How this graph was created: Search FRED for “Value Added by Industry: Private Services-Producing Industries as a Percentage of GDP.”

Suggested by Diego Mendez-Carbajo.

Paying for the place where you live—categorized as “shelter” in the consumer price index—amounts to 36% of the overall cost of goods and services purchased by an average urban household during a month. However, putting a roof over your head also involves paying for creature comforts such as heating and cooling, utilities, furniture, appliances, and operations. Together, those expenses amount to an additional 9% of the overall consumer price index. Today we look at recent housing inflation for both shelter and making that shelter habitable.

The FRED graph above shows consumer price index (CPI) data on housing expenses organized in four categories:

• Shelter (dashed blue line) includes rent, owner’s equivalent rent of residences, lodging away from home, and home insurance.
• Services (red line) includes water, sewer, and trash collection.
• Furnishings and operations (green line) includes furniture, appliances, housekeeping supplies, and a variety of items and services.
• Energy (purple line) includes fuel oil, gas, and electricity.

We customized all the data to have a value of 100 in April 2020, the end of the COVID-19-induced recession, to facilitate the analysis of housing costs over time. The data plot shows that, over the past four years, shelter became 23% more expensive and the cost of furnishing and operations and paying for non-energy utilities kept roughly that same pace.

Energy inflation has been a different story: As of the latest available observation, heating, cooling, cooking, and running electric appliances is, on average, 33% more expensive than four years ago, although those costs have come down from their peak in January 2023.

How this graph was created: Search FRED for “Consumer Price Index for All Urban Consumers: Shelter in U.S. City Average.” Next, click the “Edit Graph” button and use the “Add Line” tab to add the other three CPI series: “Water and Sewer and Trash Collection Services,” “Household Furnishings and Operations,” and “Energy.” Next, use the “Edit Lines” tab to change the units to “Index (Scale value to 100 for chosen date)” and under “Select a date that will equal 100 for your custom index:” enter “2020-04-01.” Last, click on “Copy to all” to apply that unit customization to all series in the graph.

Suggested by Diego Mendez-Carbajo.