Slowly changing consumer preferences have decreased the demand for goods, and data in FRED show this trend. Today, we explore how a change in consumer preferences and internet-based technology have affected the economic activity of video rental stores.

The FRED graph above shows Bureau of Labor Statistics data on the number of persons employed in video tape and disc rental establishments between 1987 and 2022. These data are divided by the number of persons employed in all types of consumer goods rental, multiplied by 100 to show it as a percent.

Video rental employment peaked in 1990 at 59% of all rental employment. That has steadily declined, and the latest data at the time of this writing puts that employment share at less than 3%. Let’s break it down.

Between 1987 and 2022, overall employment in rental establishments (excluding video rental) actually increased. So while consumer preferences for renting goods didn’t wane, demand for physical video rentals did. Video rental stores closed and their employment shrank as video streaming over the internet became a convenient alternative to a trip to the video store. It also eliminated late-return rental fees!

In “Video Killed the Radio Star,” The Buggles lamented that “we can’t rewind, we’ve gone too far… Put the blame on VCR.” That was 1979, a signal moment for video surpassing radio. But their lyrics may also apply to some big changes today: “They took the credit for your second symphony, rewritten by machine and new technology, and now I understand the problems you can see.”

How this graph was created: Search FRED for and select “Employment for Real Estate and Rental and Leasing: Video Tape and Disc Rental (NAICS 532282) in the United States.” From the “Edit Graph” panel, use the “Edit Line” tab to customize the data by searching for and adding “Employment for Real Estate and Rental and Leasing: Consumer Goods Rental (NAICS 5322) in the United States.” Last, type the formula (a/b)*100 and click “Apply.”

Note: This change in consumer preferences has led to a change in the name of the price index data series tracking spending on video-related recreation: In 2023, that series was renamed “Cable, satellite, and live streaming television service.”

Suggested by Diego Mendez-Carbajo.

The federal minimum wage hasn’t changed since 2009. But in those 15 years, the real value of $7.25 per hour has changed considerably due to inflation, especially in the past few years.

The FRED graph above uses data from the Bureau of Labor Statistics to show the federal minimum wage adjusted for inflation using the consumer price index, or CPI.

Keep in mind that the CPI data here correspond to actual prices in 1982-84. Thus, the real federal minimum wage (the blue line) is measured relative to the prices of that period. But it is the visual here that really matters: The real federal minimum wage has never been as low as it is now, at least within the period shown in this graph. (If you move the date tracker below the graph, you’ll see that it was lower in 1947-49.)

Of course, the federal minimum wage is only impactful if the state-level minimum wage is not set higher. And most states do set a higher minimum wage. This FRED map identifies each state’s approach to the minimum wage, including some that do not set one at all.

Now, the lower a minimum wage is, the less it’s going to matter in raising overall wages. And the fewer employees who earn that minimum wage, the less it will affect the US economy. The line in red shows the proportion of US employees who earn the minimum wage or less. (There are exceptions for certain professions.) The red and blue lines do indeed follow a very similar downward path.

How this graph was created: Search FRED for “minimum wage.” Use the “Edit Graph” panel to add the series “CPI”; change the frequency to annual, taking averages; and apply formula a/b*100. Use the “Add Line” tab to search for and select the “paid at or below minimum wage” series. Use the “Format” tab to move the y-axis for one of the series to the right. Start the sample period in 1979.

Suggested by Christian Zimmermann.

In 2023, outstanding credit card balances in the United States surpassed $1 trillion for the first time. This milestone has raised concerns about the health of household finances and the implications for consumer spending going forward.

The FRED graph above shows three measures of credit card debt, with all balances normalized to 100 in the first quarter of 2011 to better illustrate longer-run trends: The blue line shows the balances, the green line shows the balances adjusted for inflation, and the red line shows the balances as a percentage of disposable income.

The blue line shows the growth in balances on credit cards and other forms of revolving credit issued by US commercial banks since 2011. In 2023 Q3, balances were 18.2% higher than at the start of the recession in 2020 Q1 and 34.8% higher than the post-recession low in 2021 Q1.

This growth in credit card balances since 2021 has occurred alongside substantial inflation. Measured by the consumer price index (CPI), inflation reached a peak annual rate of 8.9% in June 2022. In total, the CPI rose 20% between May 2020 and October 2023, which is close to the growth in total credit card balances over this period. What do we see if we look at “real” balances—that is, nominal balances divided by the CPI? As the green line shows, in 2023 Q3, “real” credit card balances were essentially equal to their level in 2020 Q1.

Are these higher balances putting increased pressure on household finances? That depends on several factors, including the growth in other types of household debt, interest rates, and disposable income. Between 2020 Q1 and 2023 Q3, nominal personal disposable income rose by more than nominal credit card balances. As the red line shows, relative to disposable income, credit card balances were actually slightly smaller in 2023 Q3 than they had been in 2020 Q1. Of course, interest rates have risen substantially over this period, so the cost of carrying a balance has increased.

This isn’t a full analysis of the state of household balance sheets, but the growth in outstanding credit card balances does seem less alarming when compared with the growth in household income over the same period. For more insights on this topic, check on US credit scores and credit use rates.

About the data: These data don’t include balances on credit cards issued by non-bank entities, but credit card debt is mainly held by banks, so this measure is pretty solid. Also, by convention, FRED graphs show quarterly data as occurring in the first month of a quarter. So the peak in credit card balances shows as occurring in January 2020, or one month before the beginning of the recession. However, based on weekly data, the peak in credit card balances occurred during the first week of March.

How these graphs were created: Search FRED for and select “Consumer Loans: Credit Cards and Other Revolving Plans, All Commercial Banks.” From the graph, click on “Edit Graph” and open the “Add Line” tab, then search for and select “Disposable Personal Income” and “Consumer Price Index for All Urban Consumers, All Items in U.S. City Average.” For the latter two lines, add the Consumer Loans series under the “Customize data” section and set the formula to 100*(b/a) by clicking “Apply.” For all three lines, set the units to “Index (Scale value to 100 for chosen date),” enter the date “2011-01-01,” and set the frequency to “Quarterly.” Set the earliest date in the window to “2011-01-01.”

Suggested by David Wheelock.