Federal Reserve Economic Data

The FRED Blog has used data compiled by Daniel Aaronson, Daniel Hartley, and Bhashkar Mazumder to show the lasting effects on U.S. home values of the color-coded maps created by the Home Owners’ Loan Corporation in the 1930s. Today, we examine the data on rent and rental costs included in that data set.

The FRED graph above shows the same type of rental cost layering we described for home values: Between 1930 and 2000, redlined neighborhoods (areas with a “D” letter code) consistently recorded the lowest rent prices. That is to be expected, as properties in the area were old or nearby unattractive or unhealthy industrial areas. However, relative to the typical home values in those redlined areas, rental costs were consistently high during much of this period.

The second FRED graph shows the rent and rental costs in each HOLC color-coded neighborhood as a fraction of the median, or typical, home value in the same area. To leave more room for the data, the graph doesn’t display the legend (graph with legends), but the line colors match those used in the first graph. Both rental costs and home values are adjusted for inflation. Their ratio, or proportion, show a broadly declining trend between 1940 and 2000: Home values were generally growing faster than rental costs.

In conclusion, while homeowners in redlined and yellowlined neighborhoods were hindered from building up wealth by the combination of higher-than-average financing costs and lowest-of-all home values, home renters in those same neighborhoods faced proportionally higher rent costs than almost all other residents between 1940 and 1990.

How these graphs were created:
Rent and Rental Costs. From FRED’s main page, browse data by “Release,” search for “The Effects of the 1930s HOLC ‘Redlining’ Maps,” and select “Summary Statistics.” Under “Panel D. Rent” check the box to the left of each of the four HOLC neighborhood categories. Next, click on the “Add to Graph” button. Lastly, from the “Edit Graph” panel, select the “Format” tab to match the color of each line to their HOLC designation and to turn off the “Recession shading.”
Rent-to-Home-Values Ratios. Edit the graph of rent and rental costs by selecting the “Edit Line 1” tab to customize the data by searching for and selecting “Median Home Values in Home Owners Loan Corporation (HOLC) Neighborhood A.” Next, create a custom formula to combine the series by typing in “a/b” and clicking “Apply.” Repeat the same steps for the other three lines in the graph, changing the letter designating the neighborhood to B, C, and D as it corresponds.

Suggested by Diego Mendez-Carbajo.

The FRED graph above shows public lending (positive values) and public borrowing (negative values) for the United Kingdom since the year 1700. The timeline includes large downward swings that are dominated by wars:

• War of the Spanish Succession and Queen Anne’s War (1701-1714)
• War of the Austrian Succession (1740-1748)
• Seven Years’ War (1756-1763)
• American Revolutionary War and associated wars (1775-1783)
• Seven coalition wars, including the French Revolution and Napoleonic wars (1792-1815)
• World War I (1914-1918)
• World War II (1939-1945)

Of course, the United Kingdom fought many more wars, mostly in its colonies. But those seem to have been part of the normal course of operations, whereas the wars highlighted above have had a serious impact on government finances. Since World War II, the spikes in borrowing are not linked to wars, but to economic conditions, such as the stagflation of the 1970s and two recessions, and the corresponding fiscal policy responses. The COVID-19 pandemic is not yet included in these historical data.

How this graph was created: Search FRED for “public borrowing UK.”

Suggested by Christian Zimmermann.

This post falls on February 14, Valentine’s Day, and our thoughts turn sweet. Specifically, to chocolate.

Chocolate is ubiquitous and delicious and sometimes frivolous, especially while strolling through the “impulse purchase” lanes of the supermarket. But chocolate can be of major importance to those who produce it, in particular to those who produce its raw material, cocoa.

The largest exporter of cocoa is Côte d’Ivoire (Ivory Coast) in West Africa. Cocoa beans and cocoa derivatives represent close to 40% of the exports for this country of 26 million residents. Cocoa matters a lot to Côte d’Ivoire.

The FRED graph above shows a couple of things:

1. The price of cocoa is quite volatile, which happens with primary commodities. But price volatility can have big effects on economies that depend on that production.
2. For cocoa in Côte d’Ivoire, we see that higher prices help reduce the country’s public debt. Of course, many other factors affect the public debt, such as other economic activity, debt conditions, and financial markets.

As you enjoy your chocolate, take a moment to consider its economic impact. And the sweetness of FRED data.

How this graph was created: Search FRED for “cocoa price.” From the graph, click on “Edit Graph,” open the “Add Line” tab, and search for and select “Cote d’Ivoire debt.” Use the “Format” tab to move the y-axis for the second line to the right side. Restrict the sample period to when data are available for both lines.

Suggested by Christian Zimmermann.