Federal Reserve Economic Data

2021 is winding down, and new year’s resolutions are in the air. The FRED team is also thinking ahead to 2022, when it will update its data repository to reflect the discontinuation of several financial data series and the new  reliance on some replacement series.

This FRED news post provides the details of this transition. For example, 35 London interbank offered rate (LIBOR) benchmark rates produced by the Intercontinental Exchange (ICE) will no longer be calculated as of December 31, 2021. The Bank of England foretold this change in 2017 and is taking over the production of replacement series, including the Sterling Overnight Index Average (SONIA).

The FRED graph above shows the soon-to-be-discontinued overnight LIBOR in blue and its replacement, SONIA, in red. In short, both series are intended to reflect the interest rate at which banks could borrow money (denominated in British pounds, a.k.a. sterling) on unsecured terms in wholesale markets. The series are very similar in value, even though they’re calculated using different methodologies: LIBOR used a survey of large banks and SONIA is a trimmed mean of the relevant interest rates.

In the world of financial data, substituting one benchmark interest rate for another is a major endeavor. Know that FRED is at the ready to help data consumers adapt to these changes.

How this graph was created: NOTE: Data series used in this graph have been removed from the FRED database, so the instructions for creating the graph are no longer valid. The graph was also changed to static a image.

Suggested by Diego Mendez-Carbajo.

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.