Federal Reserve Economic Data

The tumultuous COVID-19-related events of the past two years have led to supply chain disruptions across nearly every industry. One notable consequence of these disruptions is the semiconductor shortage. This shortage has led to bottlenecks for many sectors, including automobiles, tech products, and home appliances. While demand in the U.S. was initially low during the COVID-19-induced recession in early 2020, the recovery has been marked by strong demand boosted by, among other things, accommodative fiscal and monetary policies.

In recent months, bottlenecks have made it difficult for input suppliers to keep up with strong demand, contributing to a sharp rise in intermediate goods prices, including lumber and some metals. Indeed, as the orange line in the FRED graph above shows, the producer price index of intermediate goods started rising immediately after the 2020 recessionary period and increased over 21% year-over-year in September 2021.

On the other hand, the dotted blue line measuring prices of semiconductors and other electronic components shows that these prices have remained relatively stable. This contrasting price response in the two indices shown in the graph is intriguing. While an explanation requires careful research, it is possible that long-term contractual relationships between producers of some final goods (such as iPhones) and their suppliers of chips may have helped mitigate fluctuations in the overall semiconductor price index. It seems that the recent scarcity of semiconductors has not been reflected in prices. There is evident excess demand and, thus, rationing.

How this graph was created: Search for and select “Producer Price Index by Industry: Semiconductor and Other Electronic Component Manufacturing.” Open the graph, click on “Edit Graph,” open the “Add Line” tab, and search for and select “U.S. Intermediate Goods PPI.”

Suggested by Subhayu Bandyopadhyay and Praew Grittayaphong.

The blue line in the FRED graph above shows the real hourly wage in the United Kingdom from the middle of the 13th century onward. It is constructed from weekly earnings data divided by weekly hours worked to obtain hourly wages. Hourly wages are then divided by the consumer price index to adjust for inflation.

This line tells the story of how economic growth emerged in the United Kingdom and, by extension, in Europe. From the middle of the 13th century until the middle of the 19th century, there was no growth in real wages. Then, modern growth started and real wages increased exponentially.

The red line (right axis) shows the population of the United Kingdom, and the green line shows the population of England. (Note the drop in population in 1350 due to the Black Death). The data for the red line start only in the 18th century. Given its similarity with the data for England, though, it is reasonable to assume that the pattern of population growth for the United Kingdom prior to the 18th century is similar to that of England.

The story of population growth is similar to that of economic growth: There was very little increase in population size until the onset of the 18th century. Then the population accelerated noticeably.

There is one important difference between population and economic growth, however: their timing. It is clear from the figure that the acceleration in population predates economic growth. Demographers have debated for a long time the causes of the modern rise in population, and economists have debated the causes of modern growth. How are the two linked, if at all? One theory is that as countries get richer the abundance of food and medical care permits longer life expectancy and therefore larger population. Such a (Malthusian) theory, intuitive as it maybe, cannot explain the timing discrepancy on this figure. An older FRED Blog post addresses a similar puzzle.

How this graph was created: Search for and select “Average Weekly Earnings Per Person in the United Kingdom.” From the “Edit Graph” panel, add “Consumer Price Index in the United Kingdom” and “Average Weekly Hours Worked in the United Kingdom.” In the formula box, enter (a/b)/c. From the “Add Line” tab, search for and select “Population in the United Kingdom.” Repeat with “Population in England.” In the “Format” tab, assign lines 2 and 3 to the right axis.

Suggested by Guillaume Vandenbroucke.

The FRED Blog has discussed inflation expectations by showing different types of data in FRED. For example, Thomson Reuters and the University of Michigan conduct the monthly Surveys of Consumers, asking people to select the inflation rate they expect to see a year from today. Also, the Federal Reserve Bank of St. Louis calculates the daily breakeven inflation rate, which is computed as the difference in returns of types of constant-maturity Treasury bills: one being the traditional bill and the other being the inflation-indexed bill.

The FRED graph above shows another measure of inflation expectations that combines data from constant-maturity Treasury bills, survey forecasts of inflation, and inflation swap rates. These expected annual inflation rates for the next 30 years are produced by the Federal Reserve Bank of Cleveland.

At the time of this writing, in December 2021, the expected inflation rate for the next year is 2.46% and the expected rates over the next two and three years are 1.96% and 1.80%, respectively. Note that when you hover over the graph the date next to each expected inflation rate is the month and year when the expectation is calculated. Between the months of January and November 2021, those expectations changed in value rather noticeably. However, as the time horizon extends farther and farther into the future, the expected inflation rates become markedly less volatile and very similar in value. That is, the green 3-year line shows less variation than the red 2-year line, which shows less variation than the blue 1-year line. This suggests that financial market indicators, survey responses, or both point to medium- and long-term price stability.

How this graph was created: Search for and select “1-Year Expected Inflation.” From the “Edit Graph” panel, use the “Add Line” tab to search for and select “2-Year Expected Inflation.” Repeat the last step to add “3-Year Expected Inflation” to the graph.

Suggested by Diego Mendez-Carbajo.