Federal Reserve Economic Data

The FRED Blog has discussed how, over the past 30 years, the composition of US trade among its partners has changed dramatically. China became the largest supplier of US imports in 2009 and kept that role until 2018. That was the golden age of offshoring. However, as the poet Emily Dickinson would remind us, “thus passes the worldly glory.”

The FRED graph above shows four data series produced collaboratively by the Census Bureau and the Bureau of Economic Analysis. Each line represents, as of December 2023, the monthly dollar value of goods imported from the largest US trade partners.* They are, in descending order, the European Union (blue line), Mexico (green line), China (red line), and Canada (purple line).

This short essay from Luis Torres at the San Antonio Branch of the Federal Reserve Bank of Dallas describes why Mexico overtook China as the second-largest supplier of imported goods into the US. A combination of new tariffs (that is, taxes on imported goods) and supply-chain disruptions reduced goods inflows from China. At the same time, Mexico and Canada boosted their manufacturing industries. In the lingo of international trade, this is the age of nearshoring—notwithstanding the European Union.

*These values exclude import duties, freight, insurance, and other charges related to bringing the merchandise into the US.

How this graph was created: Search FRED for “U.S. Imports of Goods by Customs Basis from European Union.” Next, click the “Edit Graph” button and use the “Add Line” tab to add the other three series. Save some time by typing their series ID in the search box: IMPCH, IMPMX, and IMPCA.

Suggested by Diego Mendez-Carbajo.

In January 2024, overall CPI rose 0.3% on a seasonally adjusted basis—a slight uptick from its 0.2% rate in December. It’s still a slowdown year-over-year, but this increase came as an unwanted surprise to observers expecting to see inflation continue to moderate. What’s stopping the headline inflation rate from continuing its decline?

The answer, at least in January, was shelter inflation. For January 2024, the shelter index rose by 0.6% and contributed more than two-thirds of the total CPI increase. The above graph shows the year-over-year change in shelter prices over the past decade. It’s evident that the trajectory of shelter inflation has been different from the non-shelter components of CPI: “All items less shelter” inflation peaked in mid-2022 and has been declining since, but shelter inflation peaked about one year later in March 2023 and has been declining at a slower rate.

Why is this? Shelter costs have unique characteristics that distinguish them from other goods and services. The shelter component of CPI comprises rent, lodging away from home, and owners’ equivalent rent (OER).

Rents are sticky. They change only when leases renew or a tenant moves, so it may take some time for those prices to reflect market conditions. OER comes from the same housing survey and is an attempt to estimate what owner-occupied houses would rent for, based on surveying local renters. In addition, these measures are sampled less frequently than for other goods, precisely because they change so sluggishly. This results in CPI shelter data lagging current housing market conditions.

Researchers at the San Francisco Fed, among other places, have tried to incorporate real-time data to predict what will happen to CPI shelter measures. They find that pressure from shelter inflation could ease over the coming year.

How this graph was created: Search FRED for and select “Consumer Price Index for All Urban Consumers: All Items Less Shelter in U.S. City Average.” From the “Edit Graph” section, click “Add Line” and select “Consumer Price Index for All Urban Consumers: Shelter in U.S. City Average.” In the “Edit Line” section, set units to “Percent Change from Year Ago” for both graphs.

Suggested by Nathan Jefferson.

The FRED Blog has discussed data from the High-Quality Market (HQM) corporate bond yields release reported by the US Department of the Treasury. In short, that executive agency of the federal government uses the spot rate yields of actual high-quality (that is, low-risk-of-default) corporate bonds to calculate the interest rates of 200 individual bonds with maturity dates extending far into the future. Up to 100 years in the future, in fact.

The FRED graph above shows the calculated interest rate of a hypothetical 100-year bond. The latest data available at the time of this writing is from December 2023: As of that date, the yield of a bond maturing in December 2123, had it been possible then to buy one, was projected to be 5.1%.

This information is used by the Internal Revenue Service (IRS) to calculate the present value of payment from defined benefit plans. The standard formula to compute the present value (PV) of a future value (FV) payment is PV=FV*(1/(1+i)^n), where i is the interest rate and n is the number of periods between now and the future date. The Treasury data provide the value of the interest rates in the IRS’s present value calculations.

So, how are the present values of very distant future payments looking lately? The FRED graph shows that the 100-year interest rate followed a decreasing trend between January 1984 and August 2020. Basic algebra shows that lower values of interest rates, holding constant future values and the number of periods, boost the present value of future payments. The inverse is true when interest rates rise and that has generally been the case during the past three years. Thus, as the present values of very distant future payments decrease, perhaps we should conclude this post by saying carpe diem.

How this graph was created: Search the alphabetical list of FRED releases for “Corporate Bond Yield Curve” and select “Corporate Bond Spot Rates by Maturity, Monthly, Not Seasonally Adjusted.” Scroll all the way down the page to select the series “100-year.”

Suggested by Diego Mendez-Carbajo.