Federal Reserve Economic Data

What’s really happening in US manufacturing?

In our FRED graph above, we compare labor productivity for all workers in the manufacturing sector alongside the share of manufacturing employment in total US nonfarm employment since 1987. The graph tells a compelling story: We’re producing more per worker in manufacturing, but with far fewer workers relative to the overall workforce.

Manufacturing productivity rose strongly from the late 1980s until the Great Recession in 2008-09. During this period, workers were producing more value per hour due to advances in automation, more-efficient production processes, and improved capital equipment. At the same time, the share of manufacturing workers in the total nonfarm workforce has been shrinking. This shows that even as factories are producing more, they require a smaller share of the labor force. Notably, these trends—often referred to as structural transformation—were underway long before the China trade shock of the early 2000s.

Since 2010 or so, we see that labor productivity in manufacturing has largely flattened, showing little growth compared with the period before 2010. Meanwhile, the decline in the manufacturing employment share has also slowed considerably.

This divergence has large implications. First, it underscores how innovation is reshaping manufacturing. The trends displayed above are consistent with ideas surrounding automation and technology adoption. Second, it challenges notions about manufacturing being a major job engine. If productivity keeps rising while the share of manufacturing employment falls, employment gains in the economy will need to come from other sectors.

How this graph was created: Search FRED for “All Employees, Manufacturing.” Above the graph on the right, click on “Edit Graph,” add a series by searching for “All Employees, Total Nonfarm,” and apply formula a/b. Open the “Add Line” tab and search for and select “Manufacturing Sector: Labor Productivity (Output per Hour) for All Workers.” Open the “Format” tab and place the legend on the right for the second line. Start the graph on 1987-01-01.

Suggested by Alexander Bick and Kevin Bloodworth II.

In 2025, many US households reported a surge in electricity prices. According to the producer price index (PPI) for residential electric power, these prices have gone up by 7% between January and August 2025. This rise in prices can be attributed to many supply and demand factors, including an aging power infrastructure and the construction of new data centers throughout the US, which are a major contributor to greater demand for electricity.

Looking at the data

Our FRED graph above shows the PPI values for both natural gas and residential electric power. Since 2015, the two have generally moved together. What stands out immediately is the sharp divergence between natural gas prices and electricity prices starting around 2023.

Natural gas has long been a core input for US power generation. As growth in supply outpaced demand, natural gas prices dropped significantly. Under normal circumstances, falling natural gas prices might ease wholesale electricity costs, but that relationship appears increasingly muted.

The steeper increases in residential electricity prices in recent months reflect structural pressures in the power sector that go beyond fuel costs. These include the need for extensive grid and transmission upgrades, rising operational costs, and surging electricity demand from large consumers such as data centers and other power-intensive facilities.

This widening gap hints at an increasingly strained electricity system, where capital investment needs and surging industrial demand are outpacing the benefits of cheaper natural gas. If these trends continue, electricity prices may remain elevated even in an environment of low fuel costs, reshaping energy planning for households, businesses, and policymakers.

How this graph was created: Search FRED for and select “PPI Natural gas.” Above the graph, click “Edit Graph,” open the “Add Line” tab, and search for and add “PPI Residential electric.” Open the “Format” tab and place the legend of the second line to the right. Start the sample period on 2015-12-01.

Suggested by Alexander Bick and Kevin Bloodworth II.

Gross domestic product (GDP) is the sum of all incomes distributed in a year, including disposable personal income (DPI). So, GDP and DPI are positively correlated. That is, they generally move in the same direction and follow each other closely.

Our FRED graph above shows this correlation, with one striking deviation at the point of the COVID-19 pandemic. What’s behind this deviation? A third measure, personal current transfer receipts, can help explain.

The US government increased transfers to households in such large proportions during the pandemic that DPI growth actually increased even though GDP growth decreased.

GDP and DPI

Prior to 2020, GDP and DPI show a clear positive correlation. During recessions (shaded areas in the graph), the growth rates of GDP and DPI decreased. The correlation also holds outside recessions: During the recoveries after the 1981-82 and 2007-09 recessions, the growth rates of both GDP and DPI increased.

From 2020 to 2023, however, the two series behave quite differently: GDP’s growth rate decreased while DPI’s growth rate increased.

DPI and Transfers

Although GDP and DPI are closely related, there’s a difference between them: DPI includes government transfers to individuals, which is captured by the thin red line in the graph. And it’s these transfers that explain the change in the behavior of GDP and DPI in 2020.

Our second FRED graph, above, zooms in on the period of the COVID-19 pandemic. The US government sent transfer payments to households to alleviate the severity of the crisis. In the second quarter of 2020, transfers increased substantially and so did personal disposable income, despite the fact that GDP growth had gone negative.

The growth rates of transfers and PDI then generally declined and went negative in the first quarter of 2022, despite the fact that GDP growth had been positive. By 2024, the rates were aligned once again.

Why was 2020-23 so different?

The US government has increased transfers to households before to alleviate the severity of crises. For example, the first graph shows an increase in transfers during the 2007-09 recession. So why did DPI growth actually increase during the COVID-related recession, but in no other recession?

The increase in transfers in 2008 was only 25%, compared with 75% in 2020 and 89% in 2021. Those are proportions not seen before.

How these graphs were created: Search FRED for and select “GDP.” Click on “Edit Graph,” open the “Add Line” tab, and search for and select “DPI.” Add another line search for “PCTR.” Open the “Edit Lines” tab and choose quarterly frequency and “Percent Change from Year Ago” units for each line. From the “Format” tab, choose the right axis for the third line (PCTR). For the second graph, start the sample period in 2020 Q1.

Suggested by Guillaume Vandenbroucke.