Federal Reserve Economic Data

The FRED® Blog

Household net worth, “excess savings,” and inflation since the pandemic

Recent research has connected fiscal policy during the pandemic with subsequent inflation. One common piece of evidence is the close relationship between “excess savings” and inflation in recent years. Some of our friends around the Fed discuss this in more detail: Fernando Martin, Hamza Abdelrahman and Luiz E. Oliveira, and Omar Barbiero and Dhiren Patki.

These studies calculate the level of excess savings by adding up all the savings during the pandemic that deviate from the pre-pandemic trend. Here, we use an alternative measure of household savings that also considers changes in asset valuation and leverage: specifically, the difference between household total assets and total liabilities, known as household net worth. FRED gets the relevant data from the US financial accounts published by the Board of Governors of the Federal Reserve System.

One advantage of using household net worth is that it considers the value of housing wealth, or home equity. This component of household wealth is crucial—and maybe even more so in this period because of the significant increase in house prices, which implies a considerable increase in housing wealth.

The FRED graph above shows the evolution of household net worth (divided by the level of disposable personal income to represent its relative size) and the annualized quarter-to-quarter PCE inflation rate.

Our graph confirms the close connection between household savings and inflation during this period and shows that, in the third quarter of 2023, household wealth remained above pre-pandemic levels.

How this graph was created: Search FRED for and select the “household net worth” series. From the “Edit Graph” section, use the “Edit Line 1” tab to search for and add the “disposable personal income” series. Apply formula 100*(a/(b*1000)) and click “Apply.” For the second line, open the “Add Line” tab, search for and select “PCE Index” and apply formula 100*((1+a/100)^4-1). (For consistency, we multiply disposable personal income by 1000, we annualize the quarter-to-quarter percent change in PCE, and we multiply both indicators by 100 to display them in percent.) Finally, use the “Format” tab to move the y-axis for the first line to the right side and start the sample period in 2016.

Suggested by Masataka Mori and Juan M. Sánchez.

Egg price deflation and fresh chicken price disinflation

Why did the chicken cross the road? Because egg prices had decreased

A year ago, the FRED Blog discussed how multiple outbreaks of avian influenza resulted in soaring egg prices. Today we fly back to the coop to discuss how egg prices have decreased since then.

The FRED graph above shows monthly average prices for eggs (in orange) and whole fresh chickens (in brown) reported by the US Bureau of Labor Statistics (BLS). We customized the units into percent changes from a year ago to best visualize price inflation: During months of rising prices, the graph bars rise above the zero line (this is called price inflation); during months of decreasing prices, the graph bars dip below the zero line (this is called price deflation).

Note that while egg prices registered deflation between May and December 2023, fresh chicken prices moderated their growth but did not actually decrease. Slower inflation is called disinflation.

Visit the website of the Economic Research Service of the US Department of Agriculture to learn more about how changes in food prices impact the cost of preparing meals, like this delicious infographic about the cost of apple pie ingredients… including eggs.

How this graph was created: Search FRED for “Average Price: Chicken, Fresh, Whole.” Next, click the “Edit Graph” button and use the “Add Line” tab to add “Average Price: Eggs, Grade A, Large.” Next, change the units to “Percent change from year ago” and click on “Copy to all.” Last, use the “Format” tab to change the graph type to “Bar.”

Suggested by Dieggo Mendez-Carbajo.

Stronger-than-expected employment growth in 2023 was even stronger than it seemed

US nonfarm payroll employment delivered a positive surprise in January 2024: The economy added 353,000 jobs that month—more than double the median forecast of 175,000 jobs. Another positive surprise was that past job growth reports were revised upward, showing additional signs of a strong labor market.

The ALFRED graph above shows monthly changes in nonfarm payroll employment: The red bars represent the data released last week, while the blue bars represent the data released in January, prior to the latest revisions. Data for the fourth quarter of 2023 were revised upward each month, with particularly notable gains in the December payroll, which was bumped up from 216,000 to 333,000. Strong gains in both December and January indicate positive labor market momentum to kick off 2024.

The data revisions throughout 2023 also contributed to faster employment growth than forecasted. Positive revisions occurred in nine of the twelve months of 2023. Revisions on net increased job gains by 359,000 over the course of the year, bringing the total number of jobs added to just over 3 million. Forecasters had expected employment to increase by only 1.7 million, according to the November 2022 Survey of Professional Forecasters.

While 2023 was a year of healthy job growth, it was considerably weaker than 2022, when 4.5 million jobs were added. The FRED graph below shows annual job gains for each year since January 2010. The employment level increased at such an aggressive rate in 2022 partly because the labor market was recovering the 9.2 million jobs lost in 2020. The trend of slowing annual growth is expected to continue throughout 2024, as the economy gradually returns to its longer-run trend growth.

For reference: From 2011 through 2019, the economy added on average 2.3 million jobs each year. The November 2023 Survey of Professional Forecasters reports an annual predicted growth of 1.4 million jobs in 2024.

How this graph was created: First graph: In ALFRED, search for “All Employees, Total Nonfarm” and selected the seasonally adjusted series with data until 2024. From the “Edit Graph” panel, use the “Edit Bar” tab to change the units to “Change, Thousands of Persons.” Change the selected dates above the graph to begin on January 1, 2023. Second graph: In FRED, search for and select “All Employees, Total Nonfarm,” again selecting the seasonally adjusted series. From the “Edit Graph” panel, use the “Edit Line” tab to change the units to “Change from Year Ago, Thousands of Persons.” On the same tab, change the frequency to “Annual” and then change the aggregation method to “End of Period.” Use the “Format” tab to change the graph type to “Bar.” Change the selected dates above the graph to begin on January 1, 2010.

Suggested by Charles Gascon and Joseph Martorana.



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